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REPUBLIC, LOST

RepublicLost_HCtextFl.indd i

REPUBLIC, LOST

How Money Corrupts Congress— and a
Plan to Stop It

Lawrence Lessig

TWELVE

NEW YORK BOSTON

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Twelve

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First Edition: October 2011
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As of February 27, 2014,
this work is licensed under a
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To the million Arnold Hiatts that
this revolution will need

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Contents

Preface xi

Introduction 1

PART I: The Nature of This Disease 11

1. Good Souls, Corrupted 13

2. Good Questions, Raised 21

3. 1 + 1 = 37

PART II: Tells 41

4. Why Don't We Have Free Markets? 43

5. Why Don't We Have Efficient Markets? 53

6. Why Don't We Have Successful Schools? 61

7. Why Isn't Our Financial System Safe? 67

Where Were the Regulators? 84

8. What the "Tells" Tell Us 87

PART III: Beyond Suspicion: Congress's Corruption 89

9- Why So Damn Much Money 91

Demand for Campaign Cash 92

Supply of Campaign Cash: Substance 96

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viii Contents

Supply of Campaign Cash: New Norms 99

Supply of Campaign Cash: New Suppliers 100

Economies, Gift and Otherwise 107

10. What So Damn Much Money Does 125

A Baseline of Independence 127

Deviations from a Baseline 131

0. It Matters Not at All 134

/. Distraction 138

2. Distortion 142

3- Trust 166

11. How 5o Damn Much Money Defeats the Left 172

12. How So Damn Much Money Defeats the Right 193

/. Making Government Small 196

2. Simple Taxes 199

3- Keeping Markets Efficient 207

13. How So Little Money Makes Things Worse 214

The Ways We Pay Congress 216

The Benefits of Working for Members 221

14. Two Conceptions of "Corruption" 226

PART IV: Solutions 249

15. Reforms That Won't Reform 251

The Incompleteness of Transparency 251

The (Practical) Ineffectiveness of Anonymity 260

16. Reforms That Would Reform 264

The Grant and Franklin Project 265

17. Strategy 1: The Conventional Game 273

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Contents ix

18. Strategy 2: An Unconventional (Primary) Game 276

19- Strategy 3: An Unconventional Presidential Game 280

20. Strategy 4: The Convention Game 290

21. Choosing Strategies 305

Conclusion: Rich People 309

Acknowledgments 319

Appendix: What You Can Do, Now 323

Notes 327

Index 371

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Preface

"There is only one issue in this country," former MSNBC commen-
tator Cenk Uygur told Netroots Nation, in June 2011. "Campaign
finance reform."

For the vast majority of America, Uygur's comment is obscure.
For a small minority, it is obvious. This book was written for that
vast majority, drawn from the insights of that small minority.

As I have struggled to craft it, I have become driven by the view
that practically every important issue in American politics today is
tied to this "one issue in this country," and that we must find a way
to show the connections. For both the Left and the Right, until this
"one issue" gets fixed, there won't be progress on a wide range of
critically important public policy issues. Until it gets fixed, gover-
nance will remain stalled.

The challenge is to get America to see and then act. Again and
again I have been told by friends, "If you're going to do this, the
story needs drama. There has to be good versus evil. You must tell
story after story about venal corruption. Rod Blagojevich, Randy
"Duke" Cunningham, Jack Abramoff — these are the figures who
will rally America to respond."

Maybe. But what if the problem is not Blagojevich? What if Wash-
ington is not filled with evil souls trying to steal from the republic?
What if the absolutely debilitating corruption that we face is a cor-
ruption caused by decent souls, not crooks? Could America rally to
respond then? Can we get angry enough about small but systemic
distortions that block the ability of democracy to work, if those

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xii Preface

distortions are the product of good people working in a corrupted
system?

I am unsure. As I have worked over the past four years to under-
stand this problem, I have become convinced that while a corrup-
tion of Congress is destroying the republic, that corruption is not
the product of evil. There is great harm here, but no bin Laden.
There are Jack Abramoffs and Duke Cunninghams, to be sure, but
they are the exception, not the rule. And without great evil, I am
not yet sure that we can muster the will to fight. We will, I fear, sim-
ply tolerate the corruption, as a host tolerates a parasite that is not
life threatening. Until it is.

Yet I write with hope. If we understand the nature of this cor-
ruption, its solution will be obvious. The challenge, then, will be to
build a movement to bring about that solution. Such a movement is
possible. It has been built before.

But to build it will require a different kind of learning. This is
not an academic book. I do not mean to enter an academic debate.
It instead builds upon the insights of academics to address a differ-
ent debate entirely: a political debate, within the domain of activ-
ists, that has been raging in parallel for almost a half century.

Each side in this debate talks past the other. The academic seeks
a truth, but that truth is too often too obscure for citizens to grok.
The activist seeks to motivate, but with stories that are too often
too crude, or extreme. The activist is right that the problem is
bad — indeed, worse than his focus on individual corruption sug-
gests. But the academic is right that if the problem is bad, it is not
bad because our government has returned to the Gilded Age. We
are better than they were, even if the consequences of our cor-
ruption are much worse. For this is the paradox at the core of my
argument: that even without sinning, we can do much more harm
than the sinner.

This work takes me far from my earlier writing, though the hint
of this book was clear in Remix (2008). I was driven to this shift
when I became convinced that the questions I was addressing in
the fields of copyright and Internet policy depended upon resolving

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Preface

xiii

the policy questions — the corruption — that I address here. I thus
left copyright and Internet policy, and began a process to learn as
much as I could about a vast and largely undefined field. That work
has brought me back to Harvard, where I am now the director of
the Edmond J. Safra Center for Ethics, and where I direct a five-year
research project studying this "institutional corruption" generally.
It has also pushed me to help forge a multipartisan political move-
ment (described in the Appendix) to demonstrate the need, for
the objectives of both the Right and the Left, for this fundamental
reform.

Because such is the practice this reform will need: the willing-
ness to move between the two very different worlds of the aca-
demic and the activist. I am not yet convinced that such a practice
can work. I am certain it will evoke sharp criticism from the pur-
ists in each world. But if above that din, there are citizens who can
glimpse a path to reform, that criticism is a small price to pay.

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REPUBLIC, LOST

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Introduction

'here is a feeling today among too many Americans that we
might not make it. Not that the end is near, or that doom is

around the corner, but that a distinctly American feeling of inevi-
tability, of greatness — culturally, economically, politically — is gone.
That we have become Britain. Or Rome. Or Greece. A generation
ago Ronald Reagan rallied the nation to deny a similar charge:
Jimmy Carter's worry that our nation had fallen into a state of "mal-
aise." I was one of those so rallied, and I still believe that Reagan
was right. But the feeling I am talking about today is different: not
that we, as a people, have lost anything of our potential, but that
we, as a republic, have. That our capacity for governing — the prod-
uct, in part, of a Constitution we have revered for more than two
centuries — has come to an end. That the thing that we were once
most proud of — this, our republic — is the one thing that we have all
learned to ignore. Government is an embarrassment. It has lost the
capacity to make the most essential decisions. And slowly it begins
to dawn upon us: a ship that can't be steered is a ship that will sink.

We didn't always feel this way. There were times when we were
genuinely proud — as a people, and as a republic — and when we
proudly boasted to the world about the Framers' (flawed but still)
ingenious design. No doubt, we still speak of the founding with
reverence. But we seem to miss that the mess that is our govern-
ment today grew out of the genius that the Framers crafted two
centuries ago. That, however much we condemn what government
has become, we forget it is the heir to something we still believe
divine. We inherited an extraordinary estate. On our watch, we
have let it fall to ruin.

The clue that something is very wrong is the endless list of
troubles that sit on our collective plate but that never get resolved:

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2 Introduction

bloated and inefficient bureaucracies; an invisible climate policy; a
tax code that would embarrass Dickens; health care policies that
have little to do with health; regulations designed to protect inef-
ficiency; environmental policies that exempt the producers of the
greatest environmental harms; food that is too expensive (since
protected); food that is unsafe (since unregulated); a financial sys-
tem that has already caused great harm, has been left unreformed,
and is primed and certain to cause great harm again.

The problems are many. Too many. Our eyes get fixed upon
one among them, and our passions get devoted to fixing that one.
In that focus, however, we fail to see the thread that ties them all
together.

We are, to steal from Thoreau, the "thousand [s] hacking at
the branches of evil," with " [n]one striking at the root."

This book names that root. It aims to inspire "rootstrikers." The
root — not the single cause of everything that ails us, not the one
reform that would make democracy hum, but instead, the root, the
thing that feeds the other ills, and the thing that we must kill first.
The cure that would be generative — the single, if impossibly dif-
ficult, intervention that would give us the chance to repair the rest.

For we have no choice but to try to repair the rest. Republicans
and Democrats alike insist we are on a collision course with his-
tory. Our government has made fiscal promises it cannot keep. Yet
we ignore them. Our planet spins furiously to a radically changed
climate, certain to impose catastrophic costs on a huge portion of
the world's population. We ignore this, too. Everything our govern-
ment touches — from health care to Social Security to the monopoly
rights we call patents and copyright — it poisons. Yet our leaders
seem oblivious to the thought that there's anything that needs fix-
ing. They preen about, ignoring the elephant in the room. They act
as if Ben Franklin would be proud.

Ben Franklin would weep. The republic that he helped birth is
lost. The 89 percent of Americans who have no confidence in Con-
gress (as reported by the latest Gallup poll) 1 are not idiots. They are
not even wrong. Yet they fail to recognize just why this government

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Introduction 3

doesn't deserve our confidence. Most of us get distracted. Most of
us ignore the root.

We were here at least once before.

One hundred years ago America had an extraordinary political
choice. The election of 1912 gave voters an unprecedented range of
candidates for president of the United States.

On the far Right was the "stand pat," first-term Republican
William Howard Taft, who had served as Teddy Roosevelt's secre-
tary of war, but who had not carried forward the revolution on the
Right that Roosevelt thought he had started.

On the far Left was the most successful socialist candidate for
president in American history, Eugene Debs, who had run for presi-
dent twice before, and who would run again, from prison, in 1920
and win the largest popular vote that any socialist has ever received
in a national American election.

In the middle were two "Progressives": the immensely popu-
lar former president Teddy Roosevelt, who had imposed upon
himself a two-term limit, but then found the ideals of reform that
he had launched languishing within the Republican Party; and
New Jersey's governor and former Princeton University president
Woodrow Wilson, who promised the political machine-bound
Democratic Party the kind of reform that Roosevelt had begun
within the Republican Party.

These two self-described Progressives were very different. Roo-
sevelt was a big-government reformer. Wilson, at least before the
First World War, was a small-government, pro-federalist reformer.
Each saw the same overwhelming threat to America's democracy —
the capture of government by powerful special interests — even if
each envisioned a very different remedy for that capture. Roosevelt
wanted a government large enough to match the concentrated eco-
nomic power that was then growing in America; Wilson, following
Louis Brandeis, wanted stronger laws limiting the size of the con-
centrated economic power then growing in America.

Presidential reelection campaigns are not supposed to be

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4 Introduction

bloody political battles. But Taft had proven himself to be a par-
ticularly inept politician (he was later a much better chief justice
of the Supreme Court), and after Roosevelt's term ended, business
interests had reasserted their dominant control of the Republi-
can Party. Yet even though dissent was growing across the politi-
cal spectrum, few seemed to doubt that the president would be
reelected. Certainly Roosevelt felt certain enough of that to delay
any suggestion that he would enter the race to challenge his own
hand-picked successor.

A Wisconsin Republican changed all that. In January 1911, Sena-
tor Robert La Follette and his followers launched the National Pro-
gressive Republican League. Soon after, La Follette announced his
own campaign for the presidency. Declaring that "popular govern-
ment in America has been thwarted ... by the special interests," the
League advocated five core reforms, all of which attacked prob-
lems of process, not substance. The first four demanded changes
to strengthen popular control of government (the election of sena-
tors, direct primaries, direct election of delegates to presidential
conventions, and the spread of the state initiative process). The last
reform demanded "a thoroughgoing corrupt practices act."

La Follette 's campaign initially drew excitement and important
support. It faltered, however, when he seemed to suffer a mental
breakdown during a speech at a press dinner in Philadelphia. But
the campaign outed, and increasingly embarrassed, the "stand pat"
Republicans. As Roosevelt would charge in April 1912:

The Republican party is now facing a great crisis. It is to decide
whether it will be, as in the days of Lincoln, the party of the
plain people, the party of progress, the party of social and
industrial justice; or whether it will be the party of privilege
and of special interests, the heir to those who were Lincoln's
most bitter opponents, the party that represents the great inter-
ests within and without Wall Street which desire through their
control over the servants of the public to be kept immune from
punishment when they do wrong and to be given privileges to
which they are not entitled. 2

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Introduction 5

The term progressive is a confused and much misunderstood
moniker for perhaps the most important political movement at the
turn of the last century. We confuse it today with liberals, but back
then there were progressives of every political stripe in America —
on the Left and on the Right, and with dimensional spins in the
middle (the Prohibitionists, for example). Yet one common thread
that united these different strands of reform was the recognition
that democratic government in America had been captured. Jour-
nalists and writers at the turn of the twentieth century taught
America "that business corrupts politics," 3 as Richard McCormick
put it. Corruption of the grossest forms — the sort that would
make convicted lobbyist Jack Abramoff wince — was increasingly
seen to be the norm throughout too much of American govern-
ment. Democracy, as in rule of the people, was a joke. As historian
George Thayer wrote, describing the "golden age of boodle" (1876-
1926): "Never has the American political process been so corrupt.
No office was too high to purchase, no man too pure to bribe, no
principle too sacred to destroy, no law too fundamental to break." 4

Or again, Teddy Roosevelt (1910): "Exactly as the special inter-
ests of cotton and slavery threatened our political integrity before
the Civil War, so now the great special business interests too often
control and corrupt the men and methods of government for their
own profit." 5

To respond to this "corruption," Progressives launched a series
of reforms to reclaim government. Many of these reforms were
hopeless disasters (the ballot initiative and elected judges), and
some were both disasters and evil (Prohibition and eugenics, to
name just two). But mistakes notwithstanding, the Progressive
Era represents an unprecedented moment of experimentation and
engagement, all motivated by a common recognition that the idea
of popular sovereignty in America had been sold. The problem was
not, as McCormick describes, a "product of misbehavior by bad'
men," but was instead now seen as the predictable "outcome of
identifiable economic and political forces." 6

That recognition manifested itself powerfully on November 5,

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6 Introduction

1912: The incumbent Republican placed third (23. 2 percent) in the
four-man race; the socialist, a distant fourth (6 percent); and Teddy
Roosevelt (27.4 percent) got bested by the "new" Democrat, Wood-
row Wilson (41.8 percent).

Yet only when you add together these two self-identified Pro-
gressives do you get a clear sense of the significance of 1912 : almost
70 percent of America had voted for a "progressive." Seventy per-
cent of America had said, "This democracy is corrupted; we demand
it be fixed." Seventy percent refused to "stand pat."

A century later we suffer the same struggle, but without anything like
the same clarity. A "fierce discontent," as Roosevelt described America
in 1906, is once again raging throughout the republic. Now, as then,
it gets expressed as "agitation" against "evil," and a "firm determina-
tion to punish the authors of evil, whether in industry or politics." 7
We look to a collapsed economy, to raging deficits, to a Wall Street not
yet held to account, and we feel entitled to our anger. And so extreme
is that entitlement that it makes even violence seem sensible, if only
to the predictably insane extremes in any modern society.

Roosevelt was encouraged by this agitation against evil. It was,
he said, a "feeling that is to be heartily welcomed." It was "a sign,"
he promised, "of healthy life."

Yet today such agitation is not a sign of healthy life. It is a symp-
tom of ignorance. For though the challenge we face is again the
battle against a democracy deflected by special interests, our strug-
gle is not against "evil," or even the "authors of evil." Our strug-
gle is against something much more banal. Not the banal in the
now-overused sense of Hannah Arendt's The Banality of Evil — of
ordinary people enabling unmatched evil (Hitler's Germany). Our
banality is one step more, well, banal.

For the enemy we face is not Hitler. Neither is it the good Ger-
mans who would enable a Hitler. Our enemy is the good Germans
(us) who would enable a harm infinitely less profound, yet eco-
nomically and politically catastrophic nonetheless. A harm caused
by a kind of corruption. But not the corruption engendered by evil

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Introduction 7

souls. Indeed, strange as this might sound, a corruption crafted by
good souls. By decent men. And women. And if we're to do any-
thing about this corruption, we must learn to agitate against more
than evil. We must remember that harm sometimes comes from
timid, even pathetic souls. That the enemy doesn't always march.
Sometimes it simply shuffles.

The great threat to our republic today comes not from the hid-
den bribery of the Gilded Age, when cash was secreted among
members of Congress to buy privilege and secure wealth. The great
threat today is instead in plain sight. It is the economy of influence
now transparent to all, which has normalized a process that draws
our democracy away from the will of the people. A process that dis-
torts our democracy from ends sought by both the Left and the Right:
For the single most salient feature of the government that we have
evolved is not that it discriminates in favor of one side and against the
other. The single most salient feature is that it discriminates against
all sides to favor itself. We have created an engine of influence that
seeks not some particular strand of political or economic ideology,
whether Marx or Hayek. We have created instead an engine of influ-
ence that seeks simply to make those most connected rich.

As a former young Republican — indeed, Pennsylvania's state
chairman of the Teen Age Republicans — I don't mean to rally anyone
against the rich. But I do mean to rally Republicans and Democrats
alike against a certain kind of rich that no theorist on the Right or
the Left has ever sought seriously to defend: The rich whose power
comes not from hard work, creativity, innovation, or the creation
of wealth. The rich who instead secure their wealth through the
manipulation of government and politicians. The great evil that we
as Americans face is the banal evil of second-rate minds who can't
make it in the private sector and who therefore turn to the massive
wealth directed by our government as the means to securing wealth
for themselves. The enemy is not evil. The enemy is well dressed.

Theorists of corruption don't typically talk much about decent souls.
Their focus is upon criminals — the penally corrupt, who bribe to

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8 Introduction

buy privilege, or the systematically corrupt, who make the people
(or, better, the rich) dependent upon the government to ensure that
the people (or, better, the rich) protect the government. 8

So, too, when we speak of politicians and our current system
of governance, many of us think of our government as little more
than criminal, or as crime barely hidden — from Jack Abramoff ("I
was participating in a system of legalized bribery. All of it is brib-
ery, every bit of it") to Judge Richard Posner ("the legislative sys-
tem [is] one of quasi-bribery") to Carlyle Group co-founder David
Rubenstein ("legalized bribery") to former congressman and CIA
director Leon Panetta ("legalized bribery has become part of the
culture of how this place operates") to one of the Senate's most
important figures, Russell B. Long (D-La.; 1949-1987) ("Almost a
hairline's difference separates bribes and contributions").

But in this crude form, in America at least, such crimes are rare.
At the federal level, bribery is almost extinct. There are a handful
of pathologically stupid souls bartering government favors for pri-
vate kickbacks, but very few. And at both the federal and the state
levels, the kind of Zimbabwean control over economic activity is
just not within our DNA. So if only the criminal are corrupt, then
ours is not a corrupt government.

The aim of this book, however, is to convince you that a much
more virulent, if much less crude, corruption does indeed wreck
our democracy. Not a corruption caused by a gaggle of evil souls.
On the contrary, a corruption practiced by decent people, people
we should respect, people working extremely hard to do what they
believe is right, yet decent people working with a system that has
evolved the most elaborate and costly bending of democratic gov-
ernment in our history. There are good people here, yet extraordi-
nary bad gets done.

This corruption has two elements, each of which feeds the
other. The first element is bad governance, which means simply
that our government doesn't track the expressed will of the peo-
ple, whether on the Left or on the Right. Instead, the government
tracks a different interest, one not directly affected by votes or

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Introduction 9

voters. Democracy, on this account, seems a show or a ruse; power
rests elsewhere.

The second element is lost trust: when democracy seems a cha-
rade, we lose faith in its process. That doesn't matter to some of
us — we will vote and participate regardless. But to more rational
souls, the charade is a signal: spend your time elsewhere, because
this game is not for real. Participation thus declines, especially
among the sensible middle. Policy gets driven by the extremists at
both ends.

In the first three parts of what follows, I show how these ele-
ments of corruption fit together. I want you to understand the way
they connect, and how they feed on each other. In the book's final
part, I explore how we might do something about them.

The prognosis is not good. The disease we face is not one that
nations cure, or, at least, cure easily. But we should understand the
options. For few who work to understand what has gone wrong
will be willing to accept defeat — without a fight.

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PA RT I

THE NATURE OF

THIS DISEASE

There are no vampires or dragons here. Our problems are
much more pedestrian, much more common. Indeed, any-
thing we could say about the perpetrator of the corruption
that infects our government (Congress) we could likely say
as well about ourselves. In this part, I frame this sense of cor-
ruption, to make that link clear, and to make its solution more
obvious.

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CHAPTER 1

Good Souls, Corrupted

In the summer of 1991, 1 spent a month alone on a beach in Costa
Rica reading novels. I had just finished clerking at the Supreme
Court. That experience had depressed me beyond measure. I had
idolized the Court. It turns out humans work there. It would take
me years to relearn just how amazing that institution actually is.
Before that, I was to begin teaching at the University of Chicago
Law School. I needed to clear my head.

I was staying at a small hotel near Jaco. In the center of the hotel
was a large open-air restaurant. At one end hung a TV, running all
the time. The programs were in Spanish and hence incomprehen-
sible to me. The one bit someone did translate was a warning that
flashed before the station aired The Simpsons, advising parents
that the show was "antisocial," not appropriate for kids.

Midway through that month, however, that television became
the center of my life. On Monday, August 19, 1 watched with aston-
ishment the coverage of Russia's August Putsch, when hard-line
Communists tried to wrest control of the nation from the reformer
Mikhail Gorbachev. Tanks were in the streets. Two years after
Tiananmen, it felt inevitable that something dramatic, and tragic,
was going to happen. Again.

I sat staring at the TV for most of the day. I pestered people to
interpret the commentary for me. I annoyed the bartender by not
drinking as I consumed the free TV. And I watched with geeky awe
as Boris Yeltsin climbed on top of a tank and challenged his nation
to hold on to the democracy the old Communists were trying to
steal.

I will always remember that image. As with waking up to the

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14 THE NATURE OF THIS DISEASE

Challenger disaster or watching the reports of Bobby Kennedy's
assassination, I can remember those first moments almost as clearly
as if they were happening now. And I vividly remember think-
ing about the extraordinary figure that Yeltsin was: bravely chal-
lenging in the name of freedom a coup that if successful — and on
August 19 there was no reason to doubt it would be — would cer-
tainly result in the execution of this increasingly idolized defender
of the people.

Every other player in that mix seemed tainted or compromised,
Gorbachev especially. And compromise (what life at the Court had
shown me) was exactly what the month away was to allow me
to escape. So at that moment, Yeltsin was the focus for me. Here
was a man who could be for Russia what George Washington had
been for America. History had given him the opportunity to join its
exclusive club. It had taken some initial courage for him to climb
on, but on August 19, 1991, I couldn't imagine how he could do
anything other than ride this opportunity to its inevitable end. If
democracy seemed possible for the former Soviets, it seemed pos-
sible only because it would have a voice through the rough and
angry Yeltsin.

That's not, of course, how the story played out. No doubt Yel-
tsin's position was impossibly difficult. But over the balance of the
1990s, the heroic Yeltsin became a joke. Perhaps unfairly — and cer-
tainly unfairly at the beginning, since his real troubles with alcohol
began only after he became Russia's president 1 — he was increas-
ingly viewed as a drunk. After his first summit with Yeltsin, Clinton
became convinced that his addiction was "more than a sporting
problem." 2 The public didn't even learn about the most incredible
incident until two years ago: on a visit to Washington to meet with
Clinton, Yeltsin was found by the Secret Service on a D.C. street
in the predawn hours, dressed only in underwear, trying in vain
to flag down a taxi to take him to get pizza. 3 Yeltsin fumbled his
chance at history, all because of the lure of the bottle.

As clearly as I remember watching him on that tank on August
19, I remember thinking, over the balance of that decade, about

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Good Souls, Corrupted 15

the special kind of bathos that Yeltsin betrayed. He was handed a
chance to save Russia from authoritarians. Yet even this gift wasn't
enough to inspire him to stay straight.

Yeltsin is a type: a particular, and tragic, character type. No doubt
a good soul, he wanted and worked to do good for his nation. But
he failed, in part because of a dependency that conflicted with his
duty to his nation. We can't hate him. We could possibly feel sorry
for him. And we should certainly feel sorry for the millions who
lost the chance of a certain kind of free society because of this
man's dependency.

Such characters and such dependencies, however, are not lim-
ited to individuals. Institutions can suffer them, too. Not because
the individuals within the institutions are themselves addicted
to some drug or to alcohol. Maybe they are. No doubt many are.
That's not my point. Instead, an institution can be corrupted in
the same way Yeltsin was when individuals within that institution
become dependent upon an influence that distracts them from the
intended purpose of the institution. The distracting dependency
corrupts the institution.

Consider an obvious case.

A doctor at a medical school teaches students how to treat a cer-
tain condition. That treatment involves a choice among a number
of drugs. Those drugs are produced by a number of competing
drug companies. One of those companies begins to offer the doc-
tor speaking opportunities — relatively well paid, and with reliable
regularity. The doctor begins to depend upon this income. She
buys a fancier car, or a vacation house on a lake. And while there's
no agreement, express or implied, about the doctor's recommend-
ing the drug company's treatment over others, assume the doctor
knows that the company knows what in fact she is recommending.
Indeed, it is amazing if you don't know this, that drug companies
are able to track precisely which drugs a particular doctor pre-
scribes, or not, and therefore adjust their marketing accordingly.

In this simple example, we have all the elements of the kind

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16 THE NATURE OF THIS DISEASE

of corruption I am concerned with here. The institution of medi-
cal education has a fairly clear purpose — Harvard's is to "create
and nurture a diverse community of the best people committed to
leadership in alleviating human suffering caused by disease." That
purpose requires doctors to make judgments objectively meaning
based upon, or dependent upon, the best available science about
the benefits and costs of various treatments. If a doctor within that
institution compromises that objectivity by weighing more heavily,
or less critically, the treatments from one company over another,
we can say that her behavior would tend to corrupt the institution
of education — her dependency upon the drug company has led her
to be less objective in her judgment about alternatives.

Of course, we can't simply assume that money for speaking
would bias the doctor's judgment. There is plenty of research to
show why it could, but so far that research is an argument, not
proof. 4 It is at least possible that such an arrangement leaves the
judgment of the scientist unaffected. Although, again, my own
reading of the evidence suggests that's unlikely. But my point just
now is not to prove the effect of money. It is instead to clarify one
conception of corruption. 5 It is perfectly accurate to say that if the
relationship between the doctor and the drug company affected
the objectivity of the doctor, then the relationship "corrupted" the
doctor and her institution.

In saying this, however, we need not be saying that the doctor is
an evil or bad person. If our doctor has sinned, her sin is ordinary,
understandable. And indeed, among doctors in her position, her
"sin" is likely not even viewed as a sin. The freedom or latitude to
supplement one's income is an obvious good. To anyone with kids,
or a mortgage, it feels like a necessity. We can all, if we're honest,
imagine ourselves in her position precisely. Ordinary and decent
people engage all the time in just this sort of compromise. It is the
stuff of modern life, to be managed, not condemned, because if
condemned, ignored.

We manage this sort of corruption by, first, recognizing its ele-
ments and, second, evaluating explicitly whether the institution

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Good Souls, Corrupted 17

can afford the compromise it produces. We recognize its elements
by being explicit about the range of influences that operate upon
individuals within that institution — particular influences within,
we could say, an economy of influence. Some of those influences
may be too random to regulate. Some may be the sort that any
mature understanding of human nature would say produced a
dependency.

Where there is such a dependency, those responsible for the
effectiveness of the institution must ask whether that dependency
too severely weakens the independence of the institution. If they
don't ask this question, then they betray the institution they serve.

By invoking this idea of dependency, I mean to evoke a congeries of
ideas: a dependency develops over time; it sets a pattern of interac-
tion that builds upon itself; it develops a resistance to breaking that
pattern; it feeds a need that some find easier to resist than others;
satisfying that need creates its own reward; that reward makes giv-
ing up the dependency difficult; for some, it makes it impossible.

We all understand how these ideas map onto Yeltsin's struggle.
Few of us have not been harmed by, or not done harm as, an alco-
holic. We get this dynamic. We have lived with it.

How these ideas map onto an institution, however, is some-
thing we need still to work out. Institutions are not spirits. They
don't act except through individuals. Yet each of these ideas is at
least understandable when we think of an institution in which key
individuals have become distracted by an improper, or conflicting,
dependency.

That distraction is the corruption at the core of this book. Call it
dependence corruption. 6 As I will show in the pages that follow, it
is this pattern precisely that weakens our government. It is this pat-
tern that explains that corruption without assuming evil or crimi-
nal souls at the helm. It will help us, in other words, understand a
pathology that all of us acknowledge (at the level of the institution)
without assuming a pathology that few could fairly believe (at the
level of the individual).

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18 THE NATURE OF THIS DISEASE

As an introduction to dependence corruption, consider a link
between the idea and an example more directly related to the aim
of this book.

Imagine a young democracy, its legislators passionate and eager
to serve their new republic. A neighboring king begins to send
the legislators gifts. Wine. Women. Or wealth. Soon the legislators
have a life that depends, in part at least, upon those gifts. They
couldn't live as comfortably without them, and they slowly come
to recognize this. They bend their work to protect their gifts. They
develop a sixth sense about how what they do in their work might
threaten, or trouble, the foreign king. They avoid such topics. They
work instead to keep the foreign king happy, even if that conflicts
with the interests of their own people.

Just such a dynamic was the fear that led our Framers to add to
our Constitution a strange and favorite clause of mine. As Article I,
section 9, clause 8, states,

[N]o Person holding any Office of Profit or Trust under [the
United States], shall, without the Consent of the Congress,
accept of any present, Emolument, Office, or Title, of any kind
whatever, from any King, Prince, or foreign State.

The motivation for this clause was both contemporary to the
Framers and a part of their history. At the time of the founding,
the king of France had made it a practice to give expensive gifts
to departing ambassadors when they had successfully negotiated
a treaty. In 1780 he gave Arthur Lee a portrait of himself set in dia-
monds and fixed above a gold snuff box. In 1784 he gave Benjamin
Franklin a similar portrait, also set in diamonds. The practice was
common throughout Europe. During negotiations with Spain, for
example, the king of Spain presented John Jay with a horse. Each
of these gifts raised a reasonable concern: Would agents of the
republic keep their loyalties clear if in the background they had in
view these expected gifts from foreign kings? Would the promised

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Good Souls, Corrupted 19

or expected gift give them an extra push to close an agreement,
even if (ever so slightly) against the interests of their nation?

The same fear was a part of England's past. The reign of
Charles II was stained by the fact that he, and most of his minis-
ters, received payments ("emoluments") from the French Crown
while in exile in France. Many believed the British monarchy thus
became dependent upon those emoluments, and hence upon
France. Those emoluments were viewed as a form of corruption,
even if there was no clear quid pro quo tied to the gifts. 7

Likewise with the relationship of the British Crown to ministers
in Parliament: The core corruption the Framers wanted to avoid
was Parliament's loss of independence from the Crown because
the king had showered members of Parliament with offices and
perks that few would have the strength to resist. 8 Members were
thus pulled to the view of the king, and away from the view of the
people they were intended to represent.

In each of these cases, the concern was not just a single epi-
sode. It was a practice. The fear was not just that a particular min-
ister might be bribed. It was that many ministers might develop
the wrong sensibilities. The fear, in other words, was that a depen-
dency might develop that would draw the institution away from
the purpose it was intended to serve: The people. The realm. The
commons.

Think about it like this: Imagine a compass, its earnest arrow
pointing to the magnetic north. We all have a trusting sense of how
this magical device works. When we turn with the compass in our
hands, the needle turns back. It is to track the magnetic north,
regardless of the spin we give it.

Now imagine we've rubbed a lodestone on the metal casing of
the compass, near the mark for "west." The arrow shifts. Slightly.
That shift is called the "magnetic deviation." It represents the error
induced by the added magnetic field.

Magnetic north was the intended dependence. Tracking mag-
netic north is the purpose of the device. The lodestone creates a

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THE NATURE OF THIS DISEASE

competing dependence. That competing dependence produces an
error. A corruption. And we can see that error as a metaphor for
the corruption that I am describing by the term dependence cor-
ruption.

If small enough, the magnetic deviation could allow us to believe
that the compass remains true. Yet it is not true. However subtle,
however close, however ambiguous the effect might be, the devia-
tion corrupts.

Depending on the context, depending on the time, depending
on the people, that corruption will matter. Repairing it, at least
sometimes, will be critical.

RepublicLost_HCtextFl.indd 20

8/23/11 1:19:52 AM

CHAPTER 2

Goo^ Questions, Raised

It is late at night, a sleepless night, as all nights have been since
the birth of your child. The kid is crying. You stumble into her
room to change her. She is frantic, maybe afraid. You fumble in
the dark for the pacifier, which will magically turn this anxious
source of joy into a sleeping baby. You give her the pacifier. She
starts sucking. And then an evil demon drops a single thought into
your head, a question perfectly crafted to keep you up for the rest
of the night: How do you know that plastic is safe?

And not just that plastic. What about the plastic of her cereal
bowl? Or her bottle? Or the soft spoon you use to feed her? Or any-
thing else that she puts in her mouth, which of course, for months
of her life, is absolutely anything she can touch?

If you're like I was about a decade ago (and this is not a fact I'm
proud of), you'll answer that question with a calming reassurance:
Obviously the plastic is safe. We spend billions running agencies
designed to ensure the safety of the stuff we put in our mouths.
How could it possibly be that the safety of something a baby puts
into his mouth could still be in doubt? A hundred years of consumer
safety law haven't left something as obvious as that untested.

I would have delivered that lecture to myself with some pride.
This isn't a political issue. There's no Republican in the U.S. Con-
gress who believes that the products our children consume should
be unsafe or untested. Instead, we have all come to the view that

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22 THE NATURE OF THIS DISEASE

the complexity of modern society demands this minimal regula-
tory assurance at least.

Not all societies are yet at this place. The weekend my wife
and I discovered she was pregnant with our first child, we were
in China. In the paper that morning was the story of a Chinese
businessman who had been convicted for selling sugar water as
baby formula. Parents who had relied upon the assurances of safety
printed on the bottles watched in horror as their children bloated
and died. The owner of the factory defended himself in a Chinese
court with words Charles Dickens might have penned: "No one
forced these parents to use my formula. They chose to use it. Any
deaths are their own fault, not mine."

But in fact, the demon pestering you as you lie awake in bed
after putting your child back to sleep has asked a pretty good ques-
tion. For years my wife imported our pacifiers from Europe. Until
I began the research for this book, I never asked why. "BPA" (aka
Bisphenol A), she said. In America, the vast majority of soft plastic
for children contains BPA. In many countries around Europe that
chemical has been removed from children's products.

Why?

Among the complexities in the development of a fetus is the pre-
cision of its timing. Certain things must happen at certain times,
and ordinarily they do. At certain times, for example, exposure of
the fetus to estrogen can be harmful. At those precise times, the
fetus develops a protective layer, a sex-hormone-binding globulin,
that blocks the fetus from its mother's estrogen.

In the mid-1990s, Frederick vom Saal, a professor of biological
sciences now at the University of Missouri- Columbia, began to
wonder whether the same blocking mechanism blocked man-made
estrogenic chemicals as well. Those chemicals, in theory at least,
could have the same harmful effect on the fetus. Did sex-hormone-
binding globulins protect against those, too?

The answer was not good. "The great majority of man-made
chemicals," vom Saal found, "are not inhibited from entering cells
like natural estrogens are." Worse, vom Saal found, "the receptor in

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Good Questions, Raised 23

the cell that causes changes when estrogen binds to it [remember,
changes that can, at specific stages of development, be extremely
harmful] is very responsive" to synthetic estrogenic chemicals,
including BPA. 1

Armed with (and alarmed by) this finding, vom Saal and oth-
ers started testing the actual effects of BPA on the development of
mice. The findings confirmed their worst fears. And because the
"molecular mechanisms at the cellular level [produce] no difference
in the way that mouse and rat cells respond to BPA and the way that
human cells respond to it," 2 vom Saal believed he had tripped onto
a potential health disaster. Almost everyone (95 percent) within the
developed world now has "blood levels of [BPA] within the range
that is predicted to be biologically active,' based on animal studies
conducted with low doses of the chemical." 3 A study by the Harvard
School of Public Health found that "BPA concentrations increased
by 69% in the urine of subjects who drank from plastic bottles con-
taining BPA." 4 Some studies have even detected BPA in the cord
blood of newborns. 5 The consequences of this exposure according
to this study range from "reduced sperm count to spontaneous mis-
carriages; from prostate and breast cancers to degenerative brain
diseases; from attention deficit disorders to obesity and insulin
resistance, which links it to Type 2 diabetes." 6 Indeed, just last year,
"the White House task force on childhood obesity worried [that
BPA] might be promoting obesity in children." 7 Its fear followed
this extensive and growing research.

Vom Saal's conclusions are not his alone. Indeed, to give the
issue prominence, more than thirty-six "of the world's best brains
on BPA" signed "an unprecedented consensus statement [that]
laid out [the] chilling conclusions" of the research. 8 In the view of
these scientists, BPA is a danger already causing significant harm to
children in developed nations, and will no doubt cause more harm
in the years to come.

Not all scientists agree with vom Saal and his colleagues, how-
ever. Indeed, there are many who believe BPA is either harmless
or not yet proven to cause harm in humans. Many of the studies of

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24 THE NATURE OF THIS DISEASE

BPA, these scientists believe, have been methodologically flawed.
Indeed, the National Institutes of Health itself has acknowledged
problems with some of the research. 9 Regulations that would ban
BPA, these scientists believe, are an unnecessary burden that will
only raise the cost of the products our children need (and yes,
reader who has never had a child, children need pacifiers).

Among those insisting upon the safety of BPA is, not surpris-
ingly, the industry that produces it. In December 2009, Harper's
published a summary memo from a meeting of the "BPA Joint
Trade Association." That meeting was intended to "develop poten-
tial communication/media strategies around BPA." Members at
the meeting believed that a "balance of legislative and grassroots
outreach (to young mothers and students) is imperative to the
stability of their industry." Among the strategies discussed was
"using fear tactics (e.g., 'Do you want to have access to baby food
anymore?')," and urging that consumers should have choice (e.g.,
"You have a choice: the more expensive product that is frozen or
fresh, or foods packaged in cans"). The association was concerned
that the "media is starting to ignore their side," and "doubts obtain-
ing a scientific spokesman is attainable." The memo identified the
"holy grail spokesman" for the BPA industry in the minds of these
committee members: a "pregnant young mother who would be
willing to speak around the country about the benefits of BPA." 10

Okay, so some say that BPA is dangerous. Some say it is not. You
may be with me in the former camp, or you may be in the latter
camp. Both views are fair enough.

But notice how your feelings change when you read the fol-
lowing:

Since vom Saal published his first study in 1997, there have
been at least 176 studies of the low-dose effects of BPA. Thirteen of
these studies have been sponsored by industry. The balance (163)
have been funded by the government, and conducted at universi-
ties. The industry-funded studies have the advantage of being large
scale. Most of the government-funded studies are smaller scale.
Nonetheless, here are the results:

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Good Questions, Raised 25

All of the large-scale studies found no evidence of harm. When
added to the smaller-scale studies, this meant about 24 out of the
176 found no evidence of harm. But 152 of these studies did find
evidence of harm. So from this perspective, we could say about 15
percent of the studies found the chemical harmless, while 85 per-
cent found it potentially harmful. 11

That doesn't sound good for BPA. And it does not get any better.

If you divide the studies on the basis of their funding, the results
are even starker.

HARM

NO HARM

Industry Funded

(0%)

(100%)

Independently Funded

152

(86%)

(14%)

In a single line, none of the industry-funded studies found evi-
dence of harm, while more than 85 percent of the independent
studies did.

Researchers who conduct these industry-sponsored studies are
of course "offended," as one director commented, "when someone
suggests that who pays for the study determines the outcome." 12 She
explains the difference by pointing to the "nature of the study," not
"who pays for the studies." Independent studies "typically focus on
hazards, or the intrinsic capacity to do harm," while industry-funded
studies "are interested in determining the risks of exposure." 13

Maybe. And maybe that's enough to explain the difference. But
here is the point I want you to recognize: Some will read this analy-
sis and conclude that BPA is unsafe. Some will read it and won't
change their view of BPA in the slightest. But the vast majority will
read this analysis and become less certain about whether BPA is
safe. The presence of money with the wrong relationship to the
truth is enough to dislodge at least some of the confidence that
these souls once had.

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26 THE NATURE OF THIS DISEASE

And among those not so sure, at least some will have the reac-
tion that I did, and do, every time I hand my kid a piece of plastic:
It is absurd that in America I don't know if the thing I'm feeding my
child with is safe — for her or for us.

The next time you're holding your cell phone against your ear and
notice your ear getting a bit warm, ask yourself this question: Is
your cell phone safe? Does the radiation coming from that hand-
held device — microwave radiation, emitted one inch from your
brain — cause damage to your brain? Or head? Or hand?

The vast majority of Americans (70 percent) either believe the
answer to the latter question is no or they don't know. 14 Part of that
belief comes from the same sort of confidence I've just described —
we've had cell phone technology for almost fifty years; certainly
someone must have determined whether the radiation does any
damage. Part of that belief could also come from reports of actual
studies — hundreds of studies of cell phone radiation have con-
cluded that cell phones cause no increased risk of biological harm. 15
And, finally, part of that belief comes from a familiar psychologi-
cal phenomenon: cognitive dissonance — it would be too hard to
believe to the contrary. Like smokers who disbelieved reports
about the link between smoking and lung cancer, we cell phone
users would find it too hard to accept that this essential technology
of modern life was in fact (yet) another ticking cancer time bomb.

Yet, once again, the research raises some questions.

Depending on how you count, there have been at least three
hundred studies related to cell phone safety — or, more precisely,
studies that try to determine if there is any "biologic effect" from
cell phone radiation. The most prominent of these is a recent,
$24 million UN-sponsored study covering thirteen thousand users
in thirteen nations for more than a decade. That study was deemed
"inconclusive," but it did find that "frequent cell phone use may
increase the chances of developing rare but deadly forms of brain

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Good Questions, Raised 27

cancer." 16 Specifically, the study found up to "40% higher incidence
of glioma among the top 10 percent of people who" used their phone
the most. 17 That qualification may give you comfort, at least if you
don't think of yourself as one of those sad souls glued to their cell
phones. But don't get too comfortable yet, because the study was
conceived more than a decade ago, when "heavy use" was actually
quite moderate by today's standards: thirty minutes a day put you
in the highest category for the purposes of this study. 18 Indeed, as
Dr. Devra Davis writes in her book Disconnect (2010), there's a very
general problem with the established standards for cell phone usage:
"Today's standards . . . were set in 1993, based on models that used a
very large heavy man with an eleven-pound head talking for six min-
utes, when fewer than 10% of all adults had cell phones. Half of all
ten-year-olds now have cell phones. Some young adults use phones
for more than four hours a day." 19

The concern that I want to flag, however, begins, again, when
one looks at the source of these studies. Dr. Henry Lai of the Uni-
versity of Washington has examined 326 of these radiation studies.
His analysis divides the studies into those that found some biologic
effect and those that did not. Good news: the numbers are about
even. Fifty-six percent of the studies found a biologic effect, while
44 percent did not. Not great (for cell phone users), but perhaps
not reason enough (yet) to chuck your iPhone.

But Professor Lai then divided the studies into those that were
funded by industry and those that were not. Once that division was
made, the numbers no longer seemed so benign. Industry-funded
studies overwhelmingly found no biologic effect, while indepen-
dent studies found overwhelmingly that there was a biologic effect.

BIOLOGIC EFFECT

NO BIOLOGIC EFFECT

Industry Funded

(28%)

(72%)

Independently Funded

154

(67%)

(33%)

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THE NATURE OF THIS DISEASE

Lai's work is careful, but it has not yet been published in a peer-
reviewed journal. Its conclusions, however, have been supported by
important peer-reviewed work. In a paper published in 2007 in the
journal Environmental Health Perspectives, researchers reviewed
published studies of controlled exposure to radio-frequency radia-
tion. They isolated fifty-nine studies that they believed meaning-
ful, and divided those into ones funded by industry, funded by the
public or charity, and funded in a mixed way.

Their conclusions are consistent with Lai's. As they wrote,
"studies funded exclusively by industry were indeed substantially
less likely to report statistically significant effects on a range of end
points that may be relevant to health." 20 This conclusion added "to
the existing evidence that single-source sponsorship is associated
with outcomes that favor the sponsors' products." 21

So how do these facts affect your view of cell phones?

Again, some will conclude that cell phones are dangerous. Some
will continue to believe that they are safe. But the majority will pro-

cess these facts by concluding that they are now no longer sure about
whether cell phones are safe. The mere fact of money in the wrong
place changes their confidence about this question of science.

These two stories rely upon an obvious intuition — that money in
the wrong places makes us trust less. My colleagues and I at Har-
vard wanted to test that intuition more systematically. Can we really
show that money wrongly placed weakens the confidence or trust
that people have in any particular institution? And if it does, does it
have the same effect regardless of the institution? Or are some insti-
tutions more vulnerable — more untrustworthy — than others?

Our experiment presented participants with a series of vignettes
in three different institutional contexts: politics, medicine, and con-
sumer products. In each context, the cases differed only by the
extent to which an actor's financial incentive was described to be
dependent upon a particular outcome.

RepublicLost_HCtextFl.indd 28

8/23/11 1:19:52 AM

Good Questions, Raised 29

Across all three of the domains we tested, the mere suggestion
of a link between financial incentives and a particular outcome sig-
nificantly influenced the participants' trust and confidence in the
underlying actor or institution. Doctors' advice was judged to be
less trustworthy if the procedure they recommended was tied to a
financial incentive. Politicians were judged to be less trustworthy
if they supported a policy consistent with the agenda of contrib-
uting lobbyists. Researchers for consumer products were judged
less trustworthy if their work was funded by an agency that had a
financial stake in the outcome. And most surprisingly to us, these
variations in the hypothetical we presented also significantly
influenced the participants' judgments of their own doctors, politi-
cians, and consumer goods. Even the suggestion of one bad apple
was enough to spoil the barrel.

In each of these contexts, of course, we might well say that the
participants made a logical mistake. In none of the cases did we
prove that the money was affecting the results. In none of the cases
did we even suggest that it was. But logic notwithstanding, trust
was affected merely because money was present in a way that
could have biased the results. We infer bias from the structure of
the case. Rightly or wrongly, this is how we read. 22

The field of "conflicts of interest" focuses on the question of when we
should be concerned about dueling loyalties within a single decision
maker or single institution. If, for example, you're a judge deciding
a billion-dollar lawsuit brought against Exxon, the fact that you've
got any financial connection to Exxon, however small, is enough to
disqualify you from that suit. Your decision should depend upon the
law alone. And one fear addressed by "conflicts" rules is that your
loyalty might be split between the law and your own personal gain.

But come on — a single share of Exxon stock is enough to get
a judge kicked from the case? Does anyone actually believe that a
judge would throw a case because her stock might move from sixty

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30 THE NATURE OF THIS DISEASE

dollars to sixty-one? Why does the law worry about such tiny things?
Or, more sharply, why would it require a judge to step aside merely
because, as the law states, her "impartiality might reasonably be
questioned"? Shouldn't the test be whether the judge is partial? And
if she is not partial, then shouldn't the question of whether people
"might reasonably question her impartiality" be irrelevant? We don't
lock people up in jail merely because other people "might reason-
ably" believe they're guilty. Why do we kick a judge from the bench?

Imagine a judge we know is impartial. Put aside how we know
that; just assume that we do. If we know the judge is impartial,
why should the fact that others might "reasonably" think other-
wise matter? Sure, if we don't know, what others might "reason-
ably" think might be important. But what if we do know?

The answer to these questions is that uncertainty has its own
effect. The law might say someone is innocent until proven guilty.
But law be damned, if you learn that a school bus driver has been
charged with drunk driving, you're going to think twice before you
put your child on his bus. Indeed, even if you think the charge is
likely false, the mere chance that it is true may well be enough (and
rationally so) for you to decide to drive your kid rather than risk his
life on the bus. The charge doesn't make the driver "guilty" in your
head; but it certainly will affect whether you think it makes sense
to let him drive your kid.

That's the same (Bayesian) principle that guides conflict-of-
interest analysis. 23 The legal system doesn't assume that a judge is
partial merely because her "impartiality might reasonably be ques-
tioned." But it does assume that the fact that her "impartiality might
reasonably be questioned" will affect people's trust of the judicial
system. And so to protect the system, or, more precisely, to pro-
tect trust in the system, the system takes no chances. As President
William Howard Taft explained in his "Four Aspects of Civic Duty":

This same principle is one that should lead judges not to accept
courtesies like railroad passes from persons or companies fre-
quently litigants in their courts. It is not that such courtesies

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Good Questions, Raised 31

would really influence them to decide a case in favor of such
litigants when justice required a different result; but the pos-
sible evil is that if the defeated litigant learns of the extension
of such courtesy to the judge or the court by his opponent he
cannot be convinced that his cause was heard by an indifferent
tribunal, and it weakens the authority and the general standing
of the court. 24

The legal system thus avoids that chance. Or at least it takes the
smallest chances it can. In this sense, following Professor Dennis
Thompson, we can say that the "appearance standard identifies a
distinct wrong, independent of and no less serious than the wrong
of which it is an appearance" — because of this effect. 25

But there's another side to this "impartiality might reasonably
be questioned" standard that people often miss: the word reason-
ably. The question isn't whether any crazy person might wonder
if a judge were biased. ("Your Honor, I notice you have the same
birthday as the plaintiff, and I am concerned that might mean you
are biased against Capricorns.") The question is what a "reason-
able" person might think. 26 And so a reasonable question might be:
Why stop at "reasonable"? If the objective is to protect the system,
why not require recusal whenever someone in good faith at least
worries that the judge is biased?

I learned about this side of the recusal rules the hard way. On
December 11, 1997, the judge in the Microsoft antitrust trial appointed
me a "special master" in that case. That meant I was to be a quasi,
temporary, mini-judge, charged with understanding, and then mak-
ing understandable, a complex technical question about how Win-
dows was "bundled" with Internet Explorer. Microsoft didn't want a
special master in the case, or at least they didn't want me. So almost
immediately after the appointment, they launched a fairly aggressive
campaign, in the courts and in the press, to get me removed. Their
opening bid was that I used a Mac (on the theory that a neutral master
would use Windows). It went downhill from there.

My first reaction to this firestorm (coward that I am) was to flee.

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32 THE NATURE OF THIS DISEASE

To resign. I didn't need the anger. I certainly didn't need the hate
mail (and there was tons of that). But when I spoke to a couple
of friends who were federal judges, they insisted that it would be
wrong for me to resign. If a party could dump a judge merely by
complaining, then parties could simply dial through all the judges
until they found the one they liked best. The test, as I was told, was
not whether a party could question my impartiality. The question
was whether my "impartiality might reasonably be questioned." In
their view, given the facts, it could not.

This story will help us understand the dynamic I described
earlier in this chapter. In both cases, there was a factual question
at stake: Is BPA, or are cell phones, safe? In both of those cases,
there was a process by which that question was answered: scien-
tific studies that presumably applied scientific standards to reach
their results. But in both cases, there was also an influence present
when conducting those studies that made at least some of us won-
der. Why — except bias, one way or the other — would 72 percent
of industry-funded studies find no danger from cell phones when
67 percent of independent studies found danger? Why would 100
percent of industry-funded studies find no harm from BPA while 86
percent of independently funded studies found some harm? And
is it reasonable that someone would wonder about this scientific
integrity given these differences?

That question at the very least reduces our confidence in the
resulting claims of safety. Like a mom deciding to drive her kid to
school rather than let him ride the school bus, that lack of confi-
dence could also change how we behave. Again, not because we've
necessarily concluded that something is unsafe, but because we
now have reason to doubt whether something we thought safe
actually is. That reason is the presence of an interested party, sug-
gesting that it might have been interest, not science, that explains
the difference in the result.

Put most simply: the mere presence of money with a certain rela-
tionship to the results makes us less confident about those results.

What follows from this put-most-simply fact, however, is not

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Good Questions, Raised

itself simple. The concern about conflicts must be "reasonable," as
I've described, and there are many contexts in which we can't sim-
ply wish away the money that weakens our confidence. Sixty-three
percent of drug trials are funded by the pharmaceutical industry. 27
We can't just pretend that's a small number, or wish the govern-
ment would step in to fund trials on its own. Likewise with chemi-
cals such as BPA or devices such as cell phones: It's a free country.
The government should have no power to ban industry from study-
ing its own chemicals or devices, and publishing to the world those
results, at least barring fraud.

Instead, our response to this conflict, or potential conflict, is
always going to be more complicated. We need to ask whether
there is a feasible or reasonable way to win back the confidence
that the presence of money takes away. Are there procedures that
would remove the doubt of the reasonable person? Are there other
ways to earn back that confidence?

Many private institutions get this. Many structure themselves in
light of it, taking the risk of this apparent corruption into account
and pushing it off the table.

If you're old enough to remember the Internet circa 1998, you
may remember thinking, as I did then, "This is a disaster. There's
no good way to search this network without drowning in advertis-
ing muck." Then came Google, committed to the idea, and convinc-
ing in their commitment, that at least the core search results (not
the "sponsored links" but the core bottom-left frame of a search
screen) were true, that they reflected relevance as judged by some
disinterested soul (maybe the Nets), not as bought by the advertis-
ers. As the founders wrote at the time,

We expect that advertising funded search engines will be
inherently biased towards the advertisers and away from the
needs of consumers [T]he better the search engine is, the

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34 THE NATURE OF THIS DISEASE

fewer advertisements will be needed for the consumer to find

what they want [W] e believe the issue of advertising causes

enough mixed incentives that it is crucial to have a competitive
search engine that is transparent and in the academic realm. 28

That commitment gave us confidence. It lets us trust the system,
and trust Google.

The same with Wikipedia. Wikipedia doesn't accept advertis-
ing. As it is the fifth most visited site on the Internet, that means it
leaves about $150 million on the table every year. 29 As a believer in
Wikipedia, and the values of Wikipedians, this is a hard fact for me
to swallow. The good (at least from my perspective) that could be
done with $150 million a year is not trivial. So what is the good that
the world gets in exchange for Wikipedia's abstemiousness?

As Jimmy Wales, founder of Wikipedia, described it to me, " [W]e
do care that . . . the general public looks to Wikipedia in all of its glo-
ries and all of its flaws, which are numerous of course. But the one
thing they don't say is, 'Well, I don't trust Wikipedia because it's all
basically advertising fluff.' " 30

So the Wikipedia community spends $150 million each year
to secure the site's independence from apparent commercial
bias. Wow.

Or again, think about the Lonely Planet series. Among the most
popular travel books in the world (with 13 percent of the market
share), 31 Lonely Planet has earned the trust of many. It is a reliable
source for information about the unknown places you might visit. I
use the books as often as I can.

But in gathering the information for its books, Lonely Planet
needs to assure, both itself and its readers, that the reviews it is
relying upon are trustworthy. And it strives to earn that trust with
a very clear policy: "Why is our travel information the best in the
world? It's simple. Our authors are passionate, dedicated travelers.
They don't take freebies in exchange for positive coverage so you
can be sure the advice you're given is impartial."

In all three of these cases, these private entities depend for their

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Good Questions, Raised

success upon the public trusting them. So they adopt rules that help
them earn that trust. These rules alone, of course, are not enough.
But they help. It is because of them that I have reason at least to
give the institution the benefit of the doubt. Or, more important, it
is because of these rules that I don't automatically assume financial
bias whenever I see something I don't understand, or don't agree
with. These clear and strong rules cushion skepticism; they make
trust possible because they give the public a reason to believe that
the institution will act as it has signaled it would act.

These freedom-restricting rules, moreover, are self-imposed.
Search results with integrity were a competitive advantage for
Google. That's part of why it made that choice. The same with
Wikipedia: The Internet is filled with ad-driven information sites.
Wikipedia's choice gave it a competitive advantage over others, and
a community advantage as it tried to attract authors. Likewise with
Lonely Planet: It wants a brand people can trust, as a way to sell
more books. It therefore restricts its freedom to better achieve its

In none of these cases was government regulation necessary. In
none of the cases did some professional body, such as the Bar Asso-
ciation or the AMA, need to intervene to force the companies to do
what was "right." "What was right" coincided perfectly with what
was in the best interest of these entities. As Adam Smith famously
said, they were "in this, as in many other cases, led by an invisible
hand to promote an end which was no part of [their] intention." 32

That's not always true of course. Indeed, as we'll see, pursuing
self-interest alone, without the proper regulatory structure, is often
fatal to the public interest. But here, private interests coincide with a
public good. Government intervention was therefore not necessary.

I'm sure that with each of these entities, this freedom-restricting
rule wasn't obvious, at least at the time it was chosen. Just at the
time Google launched in a big way, the biggest competitor was
ad-driven Yahoo. At the time, I'm sure everyone thought the future
of Internet search was simply Yellow Pages on steroids. Wikipedi-
ans fight all the time about whether the restriction on advertising

goals.

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THE NATURE OF THIS DISEASE

is actually necessary. And I'm quite sure that the editors at Lonely
Planet have at least thought about how much cheaper their pro-
duction costs would be if the reviewers got comp'd meals and
lodging. My claim with each is not that the choice was easy or obvi-
ous. It is instead that the choice was made with the belief that the
choice, regardless of the cost, was in the long-term interests of that
institution.

In each case, these institutions recognized that to preserve a
public's trust, they had to steel themselves against a public's cyni-
cism. They had to starve that cynicism by structuring themselves to
block the obvious cynical inference that money in the wrong place
creates. Not money. Money in the wrong place. If properly cabined,
or properly insulated, money within an institution (Google, Wiki-
pedia, Lonely Planet) can be fine. It is when it is in a place where,
as we all recognize, it will or can or could cause even the most ear-
nest compass to deviate that we should have a concern.

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CHAPTER 3

1 + 1 =

here's a frog at the center of a well-known metaphor about
our inability to respond "to disasters that creep up on [us] a

bit at a time." 1 The rap on the frog, it turns out, is false: frogs will
jump from a tub of water as it is heated to boiling. (Trust me on
this; please don't try it at home.) But the charge against us is com-
pletely fair: We don't do well with problems that don't scream their
urgency. We let them slide. We wait for the dam to break.

The previous two chapters should suggest a related disability
that is also fairly predicated of us: We don't do well responding to
bads that stand between good and evil. We teach our kids the dif-
ference between good and evil. We craft blockbuster movies to test
good versus evil. But to grow up is to recognize, and to live, the
bad that stands between good and evil. And the challenge, always,
is to motivate a response.

For while we respond appropriately to evil, we don't respond
well to good souls who do harm. We don't identify the harm well. We
don't act to stop it. Indeed, even when we see the harm clearly, we
deny its most obvious source. We can't imagine this decent soul has
caused it. So we scour the scene for the obviously corrupt or evil
one, as if only the evil could be responsible for great harm.

Yet we all know better than this. We all recognize Yeltsin, or
his character. It is our father. Or our mother. Or our uncle, or wife.
Or us. We believe the dependency is his or her responsibility, not
ours. We tell ourselves, There's nothing I can do. And so we don't.

It is because we are so familiar with this subtle form of bad —
and with our weakness in the face of it — that we are in turn also so

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38 THE NATURE OF THIS DISEASE

suspicious, or cynical, when certain puzzles confront us, and we
see an obvious source — money in the wrong place.

The job of the decent souls we call "scientists" is to tell us
truthfully whether BPA is safe, or whether cell phones will give us
gray lumps behind the ears. But we're very quick to believe that
even these good souls can be bought — again, not just by bribes, or
through fraud, but in the subtle and obvious ways in which we all
understand that money bends truth. So merely telling Americans
that money is in the mix is enough for most Americans to jump
to the ship Cynical. An institution that depends upon trust to be
effective will thus lose that trust, and therefore become less effec-
tive, if it lets money seep into the wrong place.

I mark these as obvious points, yet we forget them, always. We
know them; they guide how we live and negotiate our day-to-day
life. But when we talk about the great failing that is at the center
of this book, Congress, it is as if we return to the moral universe of
kindergarten. We have an enormous frustration with our govern-
ment. All sides try to identify the source of our frustration with
this institution in the evil or stupid acts of evil or stupid people —
senators, or worse, congressmen] Americans believe "money buys
results" in Congress — almost literally. Some believe congress-
men take bags of cash in exchange for changing their votes. They
speak as if they believe that members of Congress entered public
life because they thought public life was a quicker path to quick
cash. They wouldn't have their son or daughter marry a member
of Congress — at least the member of Congress who lives in their
abstract thoughts.

Yet when we actually meet our congressman, we confront an
obvious dissonance. For that person is not the evil soul we imag-
ined behind our government. She is not sleazy. He is not lazy.
Indeed, practically every single member of Congress is not just
someone who seems decent. Practically every single member
of Congress is decent. These are people who entered public life
for the best possible reasons. They believe in what they do. They
make enormous sacrifices in order to do what they do. They give

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1 + 1 = 39

us confidence, despite the fact that they work in an institution that
has lost the public's confidence.

Don't get me wrong. Of course there are exceptions. Obviously
some are more and some are less decent; some are more and some
are less publicly minded. And no doubt, why politicians make the
sacrifices they make is hard, psychologically, to understand. But
however much you qualify the rosy picture 1 have drawn, the truth
remains miles from the kind of machine of evil that most of us
presume occupies our capital. Any account of the failure of our
democracy that places idiots or felons in the middle fundamentally
misses what's actually going on.

Instead, the story of our Congress is these two previous chap-
ters added together:

1. We have a gaggle of good souls who have become depen-
dent in a way that weakens the democracy, and

2. We have a nation of good souls who see that dependency,
and assume the worst.

The first flaw bends policy. The second flaw weakens the pub-
lic's trust. The two together condemn the republic, unless we find
a way to reform at least one.

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RepublicLost_HCtextFl.indd 40 {g} 8/23/11 1:19:52 AM

PART I I

TELLS

None of us are expert — enough. We each may know a great
deal about something, but none of us know enough about
the wide range of things that we must understand if we're to
understand the issues of government today.

For those bits that we don't understand, we rely upon insti-
tutions. But whether we trust those institutions will depend
upon how they seem to us: how they are crafted, and whether
they are built to insulate the actors from the kind of influences
we believe might make their decisions untrustworthy.

We don't have a choice about this. We can't simply decide
to know everything about everything, or decide to ignore
the things that make us suspicious. We are human. We will
respond in human ways. And we will believe long before sci-
entists can prove. Thus we must build institutions that take
into account what we believe, especially when those beliefs
limit our ability to trust.

Including the institutions of government: We don't have
a choice about whether to have government. There are too
many interconnected struggles that we as a people face. There
may well be a conservative or libertarian or liberal response
to those struggles. But all sensible sides believe there's a role
for government in at least some of these struggles, even if
some believe that role is less than others.

When the government plays its role, we need to be able
to trust it. Not trust that it will do whatever we want, for

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42 TELLS

sometimes our party loses, and when it does, we lose the
right to demand that the government do the right (from our
perspective) thing. But whether we've won or lost, we need
to trust that the government is acting for the (politically) cor-
rect reasons: liberal, if liberals have won; conservative, if con-
servatives have won; libertarian, if libertarians have won. We
need to believe that the government is tracking the sort of
interests it was intended to track. Or at least, as Marc Hether-
ington puts it, that the "government is producing outcomes
consistent with [our] expectations." 1

When the actions of government conflict with those
expectations, we will look beyond trust, for other reasons,
to see whether they might explain the puzzle. Other reasons,
such as money in the wrong places. When we find it — when
we see that money was in the wrong place — it will affect us.
It will weaken our trust in government. It will undermine our
motivation to engage.

In this section, I select four policy struggles and point to
puzzles about each. I then stand these puzzles next to some
facts about money that might or might not have affected each
struggle. The drama here is not always as pronounced as with
BPA or cell phones. But the exercise is crucial to understand-
ing the kind of trouble our republic is facing.

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CHAPTER 4

^ We Have

Free Markets?

lype 2 diabetes is a disease that causes the body to misuse its
own insulin. Overproduction of insulin causes insulin resis-

tance. Insulin resistance increases the level of free fatty acids in
the bloodstream, and the level of sugar. Out-of-whack levels of fatty
acids and sugar do no good. The direct harms are bad enough. Indi-
rect harms include the loss of limbs, blindness, kidney failure, and
heart disease. 1

In 1985 only 1 to 2 percent of children with diabetes had type 2
diabetes. Of the adults with diabetes, 90 to 95 percent had type 2. 2
Over the past two decades, these numbers have changed, dra-
matically. Now it is children who, in at least some communities,
"account for almost half of new cases of type 2 [diabetes] ." 3 Among
all new cases of childhood diabetes, "the proportion of those with
type 2... ranges between 8% and 43%. " 4

In the view of some, the rise in type 2 diabetes among kids is
tied to an "epidemic" rise in childhood obesity. 5 Today, 85 percent
of children with type 2 diabetes are obese. That level, too, is rising. 6

And obesity is rising not just among children. Between I960 and
2006, the "percentage of obese adults has nearly tripled. ... [T] he
proportion ... who are extremely obese' increased more than
600%. " 7 Amazingly, less than a third of Americans ages twenty to
seventy-four today are at a healthy weight. 8 That proportion is not
going to improve in the near future.

Obesity-related disease costs the medical system $147 billion
annually 9 — a greater burden than the costs of cigarettes or alcohol.

So what accounts for this bloat? How did we go from being
a relatively healthy country to one certain to blow the highest

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44 TELLS

proportion of GDP of any industrialized nation dealing with the
consequences of one thousand too many Twinkies?

The most likely reason for this explosion in obesity is a change in
what we eat. As people who know something about the matter will
testify we eat too much of the wrong stuff, and not enough of the
right stuff: too much sugar, fat, processed food; not enough vegeta-
bles and unprocessed food. Between 1990 and 2006 the percentage
of adults who ate five or more fruits and vegetables a day fell from
42 percent to 26 percent. 10 Americans now drink fifty-two gallons
of soft drinks a year, with teenage girls getting 10 to 15 percent of
their total caloric intake from Coke or Pepsi. 11 These choices matter
to our bodies. They make us unhealthy and increasingly fat.

Why we make these particularly bad eating choices is a compli-
cated story. We all (and especially women) work outside the home
more than before. That means we have less time to prepare meals
and more need for meals prepared by others. The others preparing
those meals recognize that certain food qualities — the sweetness,
the saltiness, the fattiness — will affect the strength of demand
for that food. The ideal demand-inducing mix is all three together:
think double-tall caramel latte. 12

We're not about to empower federal food police, however, and
neither are we going back to the 1950s, when more of us stayed at
home cooking beets (or better). If we're going to make progress
with this problem, we need to think about the parts of the problem
that we can actually change.

The part that I want to focus on is the economics of what we
eat. Or, more precisely, the economics of the inputs to what we eat.
It's clear we eat a lot of sweet stuff. Since 1985, U.S. consumption
of all sugars has increased by 23 percent. 13 But what's interesting
is the mix of the sweet stuff we eat. It's not just sugar, or predom-
inantly sugar. Increasingly it is high-fructose corn syrup, a sugar
substitute. In 1980, humans had never tasted high-fructose corn
syrup. In 1985 it accounted for 35 percent of sugar consumption. In
2006 that number had risen to over 41 percent. 14

Why?

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Why Don't We Have Free Markets? 45

One simple answer is price. Natural sugar is expensive, relative
to high-fructose corn syrup. So the market in sweeteners moves
more and more to this sugar substitute. Or better, races to this
sugar substitute. Forty percent of the products in your supermar-
ket right now have high-fructose corn syrup in them." That num-
ber is certain to rise.

Invocation of the "market" is likely to lead some to say, "Them's
just the breaks." Markets are designed to channel resources to
where they can be most efficiently used, and to push out ineffi-
cient inputs for more-efficient ones.

Yet lovers of the market should hesitate a bit here before they
embrace this particular mix of sweetness. Indeed, an alarm for
free-market souls should sound whenever anyone talks about the
input costs from agriculture and related industries. Even for a lib-
eral like me, it is astonishing to recognize just how unfree the mar-
ket in foodstuff is. And it is embarrassing to reckon the huge gap
between our pro-free-market rhetoric around the world and the
actual market of government regulation of food production we've
produced here at home. As Dwayne Andreas, chairman of Archer
Daniels Midland (ADM), one of the most important beneficiaries of
our unfree-food market, told Mother Jones: "There isn't one grain
of anything in the world that is sold in a free market. Not one! The
only place you see a free market is in the speeches of politicians.
People who are not in the Midwest do not understand that this is a
socialist country." 16

A socialist country.

It's easy to see why this enormously wealthy capitalist cel-
ebrates this chunk of American socialism: he is a primary ben-
eficiary. Headquartered in Illinois, ADM is a conglomerate of
companies with revenues exceeding $69 billion in 2009- Accord-
ing to one estimate, at least 43 percent of ADM's annual profits are
"from products heavily subsidized or protected by the American
government." More dramatically, "every $1 of profits earned by
ADM's corn sweetener operation costs consumers $10, and every
$1 of profits earned by its ethanol operation costs taxpayers $30." 17

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TELLS

Andreas is certainly right that few from the coasts (including
the west coast of Lake Michigan) recognize just how pervasive
this socialism is. We protect milk in America. Milk, for God's sake!
"Most milk in the United States is marketed under . . . regulations
known as 'milk marketing orders.' Currently, there are [ten] federal
orders that regulate how milk is priced." 18

That means there is a map controlled by government regula-
tors that divides the country and sets the price. And by "most," that
commentator means almost 60 percent of milk production under
federal regulation, with most of the rest subject to state regulation.

This regulation is intended to subsidize dairy farmers. The
Organisation for Economic Co-operation and Development (OECD)
estimates that that subsidy increases the price of milk by about
26 percent. Cheese costs 37 percent more in the United States
than elsewhere, again because of this regulation. Butter: 100 per-
cent more in the United States than elsewhere. These differences
are not trivial.

This system of subsidy dates back to the New Deal, when at
least the government had the excuse of the phenomenally bad eco-
nomics that seemed to rule the day. "Got a depression? Here's an
idea: mandate higher prices!"

Since the 1930s the economics has improved. The politics has
not. Richard Nixon hinted that he planned to abolish the price
supports for milk. After receiving — because of the hints? — $2 mil-
lion in campaign contributions from the dairy lobby, he changed
his mind. 19 Since his flirt with free markets, no one has seriously
thought to end this economic idiocy — because it is political genius.
Highly organized special interests leverage their power to transfer
wealth from consumers to farmers.

And not just dairy farmers. The government has intervened
to protect shrimp producers against foreign competition. 20 It has
blocked more-efficient Brazilian cotton producers from selling in
the American market (by subsidizing American cotton farmers and
paying off Brazilian farmers so they won't retaliate). 21 It has waged
war to protect banana producers. 22 It has even imposed import

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Why Don't We Have Free Markets? 47

restrictions and offered low-cost loans to protect peanut farmers
(and no, Jimmy Carter is not to blame for that). 23

This protection is not just for farmers. Republican president
George W. Bush led the charge to protect steel in 2001. 24 So, too,
do we protect domestic lumber firms from Canadian competition.
According to the Cato Institute, this adds between fifty and eighty
dollars per thousand board feet, pricing three hundred thousand
families out of the housing market. 25 As University of Chicago pro-
fessors Raghuram Rajan and Luigi Zingales estimate, "trade restric-
tions imposed in the 1980s. . .cost consumers $6.8 billion a year,
while the value of government subsidies received by the industry
over the same period amounted to $30 billion." 26

Liberals are often untroubled by the idea of the government
mucking about in the market. They like the idea of the government
stepping in to help the weak. And certainly, as we non-farmers are
likely to believe, farmers are among the poorest in our society. If
a bit of milk regulation keeps a few cows on a dairy farm, latte-
sipping Starbucks customers can afford it.

But these subsidies don't help poor farmers. Nor are they pro-
duced because of a concern for the poor. The biggest beneficiaries
are the world's richest and most powerful corporate farmers. 27 Ten
percent of the recipients of farm subsidies collect 73 percent of the
subsidies — between 2003 and 2005, $91,000 per farm. The aver-
age subsidy of the bottom 80 percent? Three thousand dollars per
farm. 28 And among those receiving large farm subsidies are Fortune
500 companies such as John Hancock Life Insurance ($2,849,799),
International Paper ($1,183,893), and Chevron/Texaco ($446,914);
many celebrities, such as David Rockefeller ($553,782), Ted Turner
($206,948), and Scottie Pippen ($210,520); and several prominent
current and former members of Congress such as Chuck Grassley
(R-Iowa; 1975- : $225,041), Gordon Smith (R-Ore.; 1997-2009:
$45,400), and Ken Salazar (D-Colo.; 2005-2009: $l6l,084). 29

The same story can be told about steel. If the United States
wanted to help steel workers hurt because of shifts in the mar-
ket for steel production, it could compensate them directly. But

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48 TELLS

"instead of direct compensation to workers . . . [the] government
imposed tariffs to protect fewer than nine thousand jobs in the
steel industry" — which in turn was likely "to cost 74,000 jobs in
steel-consuming industries." 30

The list of anti-free-market interventions by our government is
endless. But the particular regulations I want to focus upon here
tie to the cost of sugar and high-fructose corn syrup (HFC). For the
interventions with this are quite extreme, and they produce quite
obvious effects. HFC is cheap relative to sugar for two very anti-
free-market reasons: the first is tariffs; the second, subsidies.

Tariffs: Sugar in the United States is two to three times as
expensive as in other countries. That's because the U.S. govern-
ment protects the domestic sugar manufacturers with tariffs (there
are all of forty sugar companies in the United States, just eight pro-
ducing 75 percent of sugar, constituting 0.5 percent of farms in
America, and employing a total of sixty-two thousand workers). 31
That tariff gives those manufacturers about $1 billion in extra prof-
its a year. It costs the overall economy (through increased prices
and inefficiency) about $3 billion. 32 Worst among those costs might
well be the environmental damage to the Florida Everglades. For as
we've pushed sugar production into Florida, it has poured millions
of gallons of polluted water into the ecosystem. 33

This protectionism hurts American business. (Every penny in
increased sugar prices is estimated to cost at least $250 million in
increased food costs.) 34 It hurts American jobs. (The Commerce
Department estimates more than ten thousand jobs between 1997
and 2002 .) 35 It hurts developing nations. (The State Department esti-
mates that burden to be at least $800 million a year.) 36 And it obvi-
ously hurts America's selling of pro-free-trade ideology: our behavior
makes a mockery of those important, wealth-producing ideals. 37

This protectionism does, however, help at least one group
beyond the sugar barons: corn producers. For the higher the cost
of sugar, the safer the market for sugar substitutes such as HFC.
Which explains why one of the biggest supporters of sugar tariffs
is a company that doesn't produce any natural sugar: ADM. Sugar

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Why Don't We Have Free Markets? 49

tariffs produce a "price umbrella" for HFC, protecting that enor-
mously profitable business from a more natural competition. 38

Subsidies: The shift to HFC, however, is not explained simply by
the high cost of sugar. It is also explained by the low cost of corn.
Corn in the United States is cheap relative to other nations because
we subsidize its production. In the fifteen years between 1995 and
2009, the government spent $73-8 billion to ensure that farmers
produced more corn than the market would otherwise bear. 39 That
corn then got used to produce lots of high-fructose corn syrup, at
an increasingly low price.

HFC is not even the most important effect of this policy by the
government. Because corn is so cheap (and accounting for all the
subsidies, some argue the cost of growing corn is actually nega-
tive), 40 cattle ranchers feed corn to their cattle. That's good for the
ranchers (feeding cattle corn rather than grazing them on grass
means more heads per acre and more profit on the bottom line).
It's not so good for small farmers or for the cattle.

Bad for small farms: This subsidy encourages the decline of
the family farm. Subsidized competitors drive out perfectly profit-
able smaller farms. Elanor Starmer and Timothy Wise, for example,
have calculated that subsidized feed for hogs has "had the effect
of reducing [factory farm] operating costs compared to those of
smaller-scale, diversified operations." 41 That artificial cost advan-
tage in turn may be driving further industrialization in the live-
stock production system — even though the cost of that system, if
fully accounted, would be no better than smaller, more traditional
farms. 42

Bad for cows: Cows don't digest corn well. Their seven stom-
achs evolved to digest grass. Corn typically makes them sick, as
bugs brew in the poorly digested mix stewing in their stomachs.
And so to deal with that sickness, farmers have to supplement corn
feed with tons of antibiotics, twenty-five million pounds of them
per year, eight times the total amount consumed by humans. 43

This profligate use of antibiotics might strike you as weird.
Before you use antibiotics, you have to get the permission of a

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50 TELLS

doctor. Cattle, it turns out, have greater freedom than we do, in
this respect at least. They are fed antibiotics prophylactically. No
doctor needs to make sure that their use is actually warranted.

But doesn't that use then induce the spread of superbugs? you
ask. For isn't the reason that we don't hand out antibiotics with
every sneeze that we don't want to foster the strongest, antibiotic-
resistant bacteria out there?

Right again. But public health concerns about the overuse of
antibiotics get checked at the door of the Department of Agricul-
ture. That agency has a long history of pushing for the widespread
use of antibiotics. 44 And the consequence of that push, as many
have argued, is that there's an explosion of drug-resistant bugs such
as E. coli 0157:H7 and salmonella. 45 Were this book a movie, we'd
now cut to a scene about a three-year-old boy who died after eating
a hamburger, or a twenty-two-year-old dance instructor who can
no longer walk. 46

It gets worse. The strategy of the concentrated corn industry is
not just to protect HFC. It is also to increase the demand for corn
generally. Enter ethanol — perhaps the dumbest "green" energy
program ever launched by government. Whole forests have been
felled pointing out the stupidity of a subsidy to produce a fuel that
is neither a good fuel (as in, it packs a good punch) nor, when you
consider the cost of refining it, 47 a green fuel. As libertarian author
James Bovard puts it, ethanol is "a political concoction — a product
that exists and is used solely because of the interference of politi-
cians with the workings of the marketplace." 48 One 2008 report
estimated that the biofuel mandates of Congress would cost the
economy more than $100 billion from 2005 to 2010. 49 That's sixty-
five times the total amount spent on renewable energy research
and development programs during the same period. 50

So the government protects sugar, and the government subsi-
dizes corn. As a result, more foods get made with high-fructose
corn syrup, and more cattle get fed corn, meaning more cattle get
fed antibiotics. The quantity of high-fructose corn syrup thus goes
up in our diet, and the prevalence of dangerous bacteria goes up as

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Why Don't We Have Free Markets?

well. And in complicated ways tied in part to these changes, it is at
least plausible that one cruel consequence of these interventions in
the market is that our kids get fat and sick.

Or, more sharply: the government distorts the market, which
distorts what we eat, which distorts our kids' bodies and health.

So, why? What leads our government to such anti-free-market
silliness?

There are many possible causes. Presidential campaigns begin
in Iowa. Rural states are overrepresented in the Senate. Subsidies
once started are difficult to end. And so on.

But as you try to reckon this mix of protections and subsidies,
there is one fact to keep clear: The beneficiaries of these policies
spend an enormous amount to keep them. The opponents spend
very little to oppose them. The campaign spending of the sugar
industry over the past two decades is high and growing. 51

SUGAR INDUSTRY CAMPAIGN SPENDING

$6.0m

$4.5m

$3.0m

$1.5m

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FIGURE 1

RepublicLost_HCtextFl.indd 51

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TELLS

The lobbying and campaign spending of the corn industry is
even higher. 52

CORN INDUSTRY LOBBYING AND
CAMPAIGN SPENDING

$20m

$15m

$10m

$5m

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FIGURE 2

These numbers are large relative to other lobbying and cam-
paign spending, even though they are tiny relative to the benefit
they seek.

But I don't offer them here to prove anything about causation.
Instead, the question that I mean these data to raise is simply this:

Not: Did these contributions buy the silliness we see?

Instead: Do these contributions affect your ability to believe
that this policy is something other than silliness?

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CHAPTER 5

Why Don't We Have
Efficient Markets?

Imagine you drove into a small town just at the moment that a cel-
ebration was beginning. The town has a single street, creatively
named Main Street. Behind the row of shops on one side of the
street, imagine there's a steep drop-off to a river below.

All the action is in front of a restaurant on Main Street. The
mayor is honoring the owner of that restaurant for her success and
profitability.

As the son of an entrepreneur, I understand the pride of the
owner. Success in business is hard. It only ever comes with hard
work. And as a student of economics, it is easy for me to recognize
the appreciation of the mayor and the town: successful business is
the lifeblood of an economy. Everyone, whether liberal or conser-
vative, should honor, celebrate, and protect such success.

But now imagine that you walked behind the restaurant and dis-
covered a torrent of trash flowing from the back door, down the
hill, and into the river. Imagine that torrent of trash flowed from
a decision by the owner of the business: rather than paying to
have her garbage collected, she simply dumped the garbage down
the hill. And imagine, finally, that if you calculated the cost of gar-
bage collection and subtracted it from the restaurant's profits, the
restaurant would no longer have been profitable. It is profitable, in
other words, only because it is not paying all of its costs.

Economists have a technical term for this kind of cost: externali-
ties. Since time immemorial, economists have argued that such costs
must be "internalized," meaning the people creating the costs must
pay for what they create. Markets that don't internalize externalities
are not, the economist insists, "efficient markets." Such markets might

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54 TELLS

be profitable (for the businesses that don't have to pay for the costs
they impose on others). But whether profitable or not, they are not
efficient. An efficient market is one that fully pays its costs, and com-
pensates for its benefits.

Put most simply, an externality is any effect that I have upon you
that you and I haven't bargained about. If my friends and I have a
party, the music from my stereo keeping you up late is an external-
ity. If my family has a barbecue, and sparks from the fire turn your
house into an inferno, those sparks are an externality. If I decide to
raise hogs in my backyard, the smell from those lovely, cuddly crea-
tures is an externality. In each case, the externality is something I
do to you that you and I haven't agreed upon. In each case, you'd be
perfectly right to complain.

But not with all externalities. Sometimes society likes the exter-
nality that I impose upon you, even if you don't. If I invent a better
mousetrap, one that might well destroy your less-innovative mouse-
trap business, competition from me thus harms you; and you and I
certainly didn't agree to that harm. Yet the law plainly encourages
me to hurt you in precisely this way. (Sorry!) And finally, some-
times you will like the externality that I "impose" upon you. Imag-
ine I renovate my house. That increases its value, and the value of
the neighborhood. We didn't negotiate about whether I'd give you
that extra wealth. I just did. The law doesn't seek to stop these
externalities; the law encourages them.

The difference is between "negative" externalities and "positive"
externalities. Negative externalities impose costs on others. Posi-
tive externalities create benefits for others, even if, as with competi-
tion, they make some people worse off. The public policy challenge
with negative externalities is to avoid these imposed costs, by forc-
ing the imposer to pay for them. The challenge with positive exter-
nalities is to ensure that the creator gets enough of the externalized
benefits to have incentive to produce them in the first place.

To say that something is a "public policy challenge," however,
is not to argue for a government program to solve it. Neighbors
are pretty good at working stuff out. And social norms lead even

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Why Don't We Have Efficient Markets? 55

the stranger on a highway to bus his tray at a restaurant. Likewise
with externalized benefits: Just because painting my house makes
you wealthier doesn't mean that justice requires a tax to give some
of that benefit back to me. Often, both negative and positive exter-
nalities are manageable without some regulator stepping in the
middle.

Many externalities are not manageable like this, however, and
the government is needed then to avoid both the underproduction
of positive externalities and the overproduction of negative exter-
nalities.

Consider, for example, the case of movies. Imagine a blockbuster
Hollywood feature that costs $20 million to make. Once a single copy
of this film is in digital form, the Internet guarantees that millions of
copies could be accessed in a matter of minutes. Those "extra" cop-
ies are the physical manifestation of the positive externality that a
film creates. The value or content of that film can be shared easily —
insanely easily — given the magic of "the Internets."

That ease of sharing creates risk of underproduction for such
creative work: If the only way that this film can be made is for the
company making it to get paid by those who watch it, or distribute
it, then without some effective way to make sure that those who
make copies pay for those copies, we're not going to get many of
those films made. That's not to say we won't get any films made.
There are plenty of films that don't exist for profit. Government
propaganda is one example. Safety films that teach employees at
slaughterhouses how to use dangerous equipment is another.

But if you're like me, and want to watch Hollywood films more
than government propaganda (and certainly more than safety films),
you might well be keen to figure out how we can ensure that more
of the former get made, even if we must suffer too much of the latter.

The answer is copyright — or, more precisely, an effective sys-
tem of copyright. Copyright law gives the creator of a film (and
other art forms) the legal right to control who makes copies of it,
who can distribute it, who displays it publicly, and so forth. By giv-
ing the creator that power, the creator can then set the price he or

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56 TELLS

she wants. If the system is effective, that price is respected — the
only people who can get the film are the people who pay for it.
The creator can thus get the return she wants in exchange for cre-
ating the film. We would be a poorer culture if copyright didn't
give artists and authors a return for their creativity.

Since 1995, Congress has enacted thirty-two different statutes
to further refine and strengthen the protection of copyright. 1 The
frequency of these new laws has increased as digital technologies
have put more pressure on the traditional architecture of copyright.
But there's little doubt that the objective of this system of regula-
tion is good and important for a free and flourishing culture.

So, fair enough. Congress has a reason to address this prob-
lem of positive externalities. The energy devoted to addressing
this problem is consistent with that reason. Some intervention is
plainly needed in this context. The government has plainly inter-
vened some. Free riders (aka the "pirates") might want to block
that intervention. But so far they've not succeeded in blocking this
federal regulation. Congress has overcome resistance and internal-
ized the benefits of these positive externalities.

But what about negative externalities? What has Congress done
about them? As compared with its vigorous defense of the copy-
right industries, with thirty-two laws in sixteen years, what has it
done to deal with the twenty-first century's equivalent to the res-
taurant owner at the start of this chapter: carbon pollution?

For, just like the restaurant owner, there are many within our
economy who claim profits only because they ignore the cost of
cleaning up the carbon they spew out their virtual back door. Take
power companies that use coal to produce electricity: According to
the Pew Center on Global Climate Change, the cost of capturing and
sequestering carbon produced by coal-fired power plants is between
$30 and $90 a ton. In 2003 more than 1.9 billion tons of carbon were
spewed into the air by burning coal to produce electricity. 2 That
means the cost to clean up the carbon those companies produced
was between $280 and $840 billion in 2003 alone. The total profits
of the coal and petroleum industry combined in 2003? $23.3 billion. 3

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Why Don't We Have Efficient Markets? 57

These companies plainly produce negative externalities. They
don't pay for the externalities they produce. Those externalities impose
significant costs on our society and ecology. The most tangible are
the health costs — estimated to be $100 billion per year. 4 The most
profound are the contributions to the problem of climate change.

Now you might be a climate change skeptic. You might think,
isn't the science about global warming contested? Aren't there sci-
entists who doubt — and even deny — that carbon is harmful to our
climate?

And of course, there is some contest. There are some scientists
who doubt whether the harm from climate change is as great as
Al Gore says it is, just as there are some economists who doubt
whether the creators of culture need all the protection that the law
of copyright now gives them.

But these two contests are radically different. If you took the aver-
age of every estimate by every scientist, skeptic or not, of the poten-
tial harm caused by climate change, and compared that to the average
of every estimate by every economist, skeptic or not, of the harm
caused to creativity by the Internet, climate change costs would be a
mountain (call it Everest) and creativity costs would be a molehill (and
you've not seen many molehills precisely because they're so small).

So then, while passing more than thirty laws over the past six-
teen years to address the alleged harm to creativity caused by the
Internet, how many times in the past fifteen years has Congress
passed legislation to make carbon polluters cover the cost of their
pollution? Or even the past twenty-five years?

Not once.

While the copyright free riders have failed to block externality-
internalizing legislation affecting creativity, the carbon free riders
have repeatedly succeeded in blocking the externality-internalizing
legislation affecting climate change. Where the harm is almost cer-
tain, Congress does nothing. Where the harm is at best contested,
Congress races to the rescue.

As a matter of principle, there is nothing political about the point
my comparison is meant to draw. No sensible Republican would

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defend the restaurant owner at the start of this chapter. Nor would
she say that a polluter shouldn't pay the cost to clean up his pol-
lution. And while there's plenty to disagree about when deciding
how best to clean up carbon pollution, there couldn't really be a
principled reason to say we should not clean it up at all. Or, more
strongly: if we are deploying federal courts to protect against the
uncertain harm to Hollywood, we should be deploying someone
or something to protect against the radically less uncertain harm to
our economy and environment caused by carbon pollution.
Yet we don't. Why?

PRO-CARBON REFORMERS
$28,000,000

ANTI-CARBON REFORMERS
$211,600,000

AGGREGATE SPENDING:
CLIMATE CHANGE LEGISLATION

FIGURE 3

Here again, the political scientist might demur. There are many dif-
ferent causes, some good, some not so good. Good: Getting it wrong
with climate change is costly (lost jobs, slowed economic growth).
Getting it wrong with copyright is less costly (we don't get as much for
free). Not so good: Key Democrats come from big-coal states. They're

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Why Don't We Have Efficient Markets?

not about to willingly accept higher costs for energy, even if justified
by good economic principles. 5 The carbon free riders have important
allies. Copyright free riders, on the other hand, don't.

But as well as reasons good and not so good, there's another we
cannot ignore. There is a radical difference in political funding by
pro-reform advocates of both carbon and copyright.

Pro-carbon reformers get wildly outspent by anti-reformers. In
2009, pro-reform and anti-reform groups fought vigorously over
whether Congress would enact a cap-and-trade bill to address car-
bon emissions. They didn't fight equally. 6 The reform movement
spent about $22.4 million in lobbying and campaign contributions.
The anti-reform movement spent $210.6 million.

An even more dramatic story can be told about copyright.
Between 1998 and 2010, pro-copyright reformers were outspent
by anti-reformers by $1.3 billion to $1 million — a thousand to
one. 7 These are rough estimates, as transparency organizations don't

PRO-REFORMERS
$1,088,000

ANTI-REFORMERS
$1,339,300,000

AGGREGATE SPENDING:
COPYRIGHT LEGISLATION

FIGURE 4

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aggregate copyright as a category. But even if I am wrong by a cou-
ple of orders of magnitude, the point is still correct: in both cases,
the anti-reformers outspend the pro-reformers by at least a factor of
ten.

So, again: Don't read these numbers to make any claim about
causation. Read them and ask yourself one question only:

Not: Did the contributions and lobbying buy this apparently
inconsistent result?

Instead: Do the contributions and lobbying make it harder to
believe that this is a principled or consistent or sensible result?

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CHAPTER 6

Why Don't We Have
Successful Schools?

Imagine a virus that spreads among kids, causing a certain kind
of brain damage. The virus strikes kids at certain schools more
than kids at other schools. It seems to strike rich kids less than
poor. But it is pervasive, and spreading.

Then imagine that scientists discover a vaccine — a vaccine that
might guarantee that no one, neither rich nor poor, will contract
this brain-damaging disease. Imagine this vaccine is relatively inex-
pensive. Or, at least, the cost of the vaccine is a fraction of the cost
of the damage done by the virus.

How long would it take before that vaccine spread to every kid
in America?

We've argued throughout our history about just what government
should do. Should there be a standing army? (Framers: no. Us: yes.)
Should the government subsidize a partisan press? (Framers: yes.
Us: no.) Should the federal government build highways? (Framers:
no. Us: yes.)

But the one thing that everyone believes, at least now, is that the
government has an essential role in ensuring a good education for our
kids. Not everyone agrees on how. Some believe a voucher is all the gov-
ernment need do. Some believe it must mandate that everyone attend
a public school. But within that wide range of means, all agree on the
end: a safe and prosperous nation requires a well-educated youth.

We are failing in this. Miserably. In 1973 the United States was
ranked high in the world in providing high-quality public educa-
tion. We have fallen to fourteenth in reading among OECD coun-
tries (with math at twenty-five, and science at seventeen). 1 Things,

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62 TELLS

of course, were not so great for many, many Americans in 1973-
They are just bizarrely worse for almost all Americans today. 2

One particular problem in the collection of challenges around
public education has been how to improve the lot of the worst-off
among us. Despite the fact that billions have been spent to improve
our schools — indeed, a radical increase in spending since 1973 —
the performance (especially of the poorest among us) has flatlined.
We've seen very little improvement, indeed a tiny improvement
relative to the resources that have been expended.

Yet in the past decade, educators have begun to make prog-
ress. (The vaccine.) In very different educational contexts, a set
of reforms has demonstrated that we can educate our children,
including the poorest among us, to achieve college-bound com-
petency. Indeed, in one long-term experiment in Harlem — in the
worst district in Harlem — test results show students closing the
race gap in performance. 3

The key variable in these experiments is not who owns the
school (whether public or private, whether a charter or not), or
how big the classrooms are, or how many computers there are per
student. It is instead a much more pedestrian, indeed, obvious, dif-
ference: teachers. For these reformers, the single most important
component to successful education today is great teachers. Within
the same school, and the same population, the difference between
good and bad teachers can be a 300 percent difference in learning
in a single year. According to Professor Eric Hanushek of Stanford's
Hoover Institute, if we could eliminate just the bottom 6 to 8 per-
cent of bad teachers, we could bring our results up to the standards
of Finland, perhaps the best in the world. 4

If you were convinced about the importance of teachers, you
might wonder what stops school districts from getting better
teachers. What stands in the way?

Many things, of course. We pay teachers a ridiculously small
amount. In poor districts, we provide them with a ridiculously unequal
range of resources. And as we'll see later on, whenever we try to get
government service on the cheap, cheap is precisely what we get.

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Why Don't We Have Successful Schools? 63

Without doubt, if we're going to fix education, we're going to have to
be willing to pay good teachers more of what good teachers are worth.

At least some reformers believe, however, that low pay alone
does not explain poor teacher performance. Some believe that
there's another feature of our public education system that needs
to be questioned: teacher tenure, which protects the worst (and
the best) of public school teachers.

I mean that term, teacher tenure, precisely, so let's be clear
about what it means. Everyone's heard about tenure. Tenure means
a set of workplace protections that makes it extremely difficult to
remove the tenured employee. Judges have tenure. Academics have
tenure. And K-12 teachers in public schools have tenure.

As with any workplace employment innovation, however, tenure
has its benefits and its costs. The benefits are independence. We give
judges tenure so they can do their job without fearing punishment
by the government. We give academics tenure so they can do their
job (primarily research) without fearing punishment by the govern-
ment or the university for pursuing politically unpopular research.
And we give teachers tenure to protect them from the arbitrary and
powerful control of school administrators. The thought in all these
cases was that security would improve performance, by protecting
the employee against arbitrary action by the employer.

That protection has costs. A bad judge can do really bad
things — though, of course, except for the Supreme Court, bad deci-
sions get reviewed by higher courts. A terrible academic can waste
valuable resources — but at least college and graduate students
select which teachers they'll have, and they can easily select away
from the teachers ranked poorly. And a bad teacher can adversely
affect the primary education of his kids.

These costs must be compared to the benefits that tenure provides.
And where the costs outweigh the benefits, we shouldn't have tenure.

Now, obviously, I've got a personal conflict here. I am a profes-
sor. I have tenure. I believe tenure has been important to my ability
to do my work. But I am completely open to being convinced that
we don't need tenure in universities anymore. I'm less open to that

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64 TELLS

argument with judges: the independence of the judiciary is critical,
and essential if our democracy is to flourish.

Yet I'm skeptical about the argument for tenure for teachers.
We know, based upon absolutely convincing evidence, that there
are good teachers and bad teachers. We know, based on the same
evidence, that bad teachers destroy educational opportunities for
their kids. We know, based on common knowledge, that we're not
about to give third graders a choice about which teacher they have
for home room. And we know, based upon evidence and experi-
ence, that a system that protects failure will only encourage more
failure. So if we know all these things, then we also know that the
elaborate system of protections that school boards have agreed to
may actually be inhibiting student success.

That's not to say that there should be no employment protec-
tion for teachers. There are lots of arbitrary and impermissible rea-
sons for firing people that should be banned — race, gender, sexual
orientation, religious affiliation, etc. But if the reformers are right,
then principals need more freedom to filter out educators who are
failing to perform. Just as a bus driver who fails to drive a bus safely,
or an airplane pilot who lands at the wrong airport, or a lawyer
who can't file his briefs on time, or an accountant who can't add, a
teacher who can't demonstrate educational progress with his class
should find a different job. Performance is at the core of efficient
and effective business. It should be at the core of education as well.

If we could make performance the key to teacher retention and
evaluation — if— then we would have a good chance to turn this
failure of an education system around. Or, again, so these reform-
ers insist. Not costlessly: we need to pay teachers more, or at least
good teachers more. But with the kind of investment we already
make in education, we could begin to close achievement gaps, and
actually do what public education was meant to do: educate our
kids and therefore our public.

Effective teacher performance is thus the vaccine at the start of
this chapter. Poor teacher performance is the virus. We have the
data to show that we now have a vaccine against this virus. We've

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Why Don't We Have Successful Schools?

had it for almost a decade. 5 Yet we have not deployed that vaccine
broadly or systematically. Instead, politicians have continued to
defend a system of tenure that is weakening the effectiveness of
public education. Generations of hopelessness are being produced
by this recalcitrance. What might explain the resistance?

There are lots of possible theories. Funding may be inadequate.
No doubt it is wildly inadequate in poor neighborhoods. Moreover,
poverty generally diminishes the educational opportunities of kids,
as parents cannot provide a constructive environment for educa-
tion. Perhaps testing has skewed the way we teach. Perhaps parents
don't do enough to support young kids. And no doubt, better pre-
school interventions would radically improve performance overall. 6

But there's one fact we can't ignore. The teachers' unions are
among the largest contributors to the Democratic Party — by far.
And the amount they've spent on "reform" outpaces that of the
next-largest reform groups by two orders of magnitude. 7

TEACHERS' UNION CONTRIBUTIONS

$14.0m

$10.5m

$7.0m

$3.5m

■=3"

o
o
o

fNl

tN
O
O

O
O
rsi

l£) 00

O O

rsi rsi

rsi

FIGURE 5

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TELLS

So, again, I am asking:

Not: Did the teachers' unions buy protection from more inten-
sive performance evaluations?

Instead: Does the influence of the unions' spending weaken
your ability to believe that the current pro-tenure policy makes
sense?

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CHAPTER 7

7j»V Our Financial
System Safe?

merica is still feeling the effects of the worst economic col-
lapse since the Great Depression. That collapse was triggered

in 2008 by a crisis on Wall Street. All of the major banks in America
were drawn to the brink of bankruptcy. It took the largest inter-
vention in the history of the nation to avoid a crisis likely to be
worse than the Great Depression.

Tomes have been written about this crisis and its causes. Prac-
tically every single actor within our system of finance — from the
borrowers to the lenders to the government overseeing it all — has
been blamed by someone for the disaster. Some of that blame is
politically motivated. Some of it is grounded in ignorance. But
there is certainly enough to touch anyone of any consequence in
this story and more than enough to rock our confidence in these
institutions intended to keep us financially safe.

The cause that I find least convincing, however, is irrational-
ity. Some argue that it's just craziness that explains the crisis.
That somehow, and inexplicably, everyone just became insanely
greedy — irrationally borrowing more than they could repay, irra-
tionally lending more than was prudent, irrationally ignoring
the warnings of impending doom — and now that this fever has
passed, we can look forward to another fifty years of financial sta-
bility. Like the measles or small pox, if you survive it, you don't get
it again.

This is a criminally incomplete understanding of the disaster
that we've just suffered. And while it would take a whole book to
make that case convincingly, in the few pages that follow, I sketch

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TELLS

one part of the argument with enough detail to make it relevant to
the argument of this book.

For the core driver in this story was not craziness. It was ratio-
nality. The behavior we saw — from borrowers to lenders to Wall
Street to government officials — was perfectly rational, for each of
them considered separately. It was irrational only for the system as a
whole. We need to understand the source of that irrationality — not
an individual, but a systemic irrationality — to ask whether the policy
judgments that produced it could even possibly have made sense.

That source is tied directly to regulation. 1 In my view, the single
most important graph capturing the story of American finance was
created by Harvard Business School professor David Moss (Figure 6). 2

June 1933

4500

o
■■p

13
+->

March 1980

10%

03
-M
C
CD
U
i_
<D

IA0%

1860 1900 1920 1940 1960 1980 2000

Total Failures

Total Deposits of Failed Institutions (% of GDP)
Total Deposits of Assisted Institutions (% of GDP)

FIGURE 6

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Why Isn't Our Financial System Safe? 69
Moss explains the picture like this:

Financial panics and crises are nothing new. For most of the
nation's history, they represented a regular and often debilitat-
ing feature of American life. Until the Great Depression, major
crises struck about every 15 to 20 years — in 1792, 1797, 1819,
1837, 1857, 1873, 1893, 1907 and 1929-33-

But then the crises stopped. In fact, the United States did
not suffer another major banking crisis for just about 40 years —
by far the longest such stretch in the nation's history. Although
there were many reasons for this, it is difficult to ignore the fed-
eral government's active role in managing financial risk. This
role began to take shape in 1933 with the passage of the Glass-
Steagall Act The simple truth is that New Deal financial reg-
ulations worked. In fact, [they] worked remarkably well. 3

If you want to understand where the craziness began, we
should begin where the "New Deal financial regulations" begin to
end. This is the delta in the environment. Or it is at least the one
self-conscious change that should be the first target of suspicion.

The most efficient entry into this argument is a quote from Judge
Richard Posner. Judge Posner sits on the U.S. Court of Appeals for
the Seventh Circuit in Chicago. He is among the most prolific legal
academics and the most prolific judges in the history of the nation.
He is certainly among the most influential. His book Economic
Analysis of Law (1973) founded the law and economics movement.
Since then he has written fifty more books, hundreds of articles,
and thousands of judicial opinions. He was appointed to the federal
bench by Ronald Reagan thirty years ago. Whatever we can say, we
can be certain, Posner is no socialist.

Among Posner's fifty-some books are two that deal specifically
with the financial crisis. 4 And at the core of Posner's argument is an
insistence that we understand the rationality behind this insanity.
As he writes, criticizing a government report on the crisis:

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70 TELLS

The emphasis the report places on the folly of private-sector
actors ignores the possibility that most of them were behaving
rationally given the environment of dangerously low interest
rates, complacency about asset-price inflation (the bubbles that
the regulators and, with the occasional honorable exception,
the economics profession ignored), and light and lax regulation. 5

This is the idea that I want to pursue here: that the gambling
that Wall Street engaged in made sense to them given (1) "the envi-
ronment of dangerously low interest rates," (2) "complacency about
asset-price inflation," and (3) "light and lax regulation." My focus
will be on (3) "light and lax regulation" and (2) "complacency about
asset-price inflation." For our purposes, let us stipulate that (1) is
also correct.

For, of all of the clues to this mystery, the one that should be
most obvious is again the one that Moss's graph describes best: the
economy that drove itself off the cliff was a financial system operat-
ing under different rules from the stable and prosperous financial
system of the forty years before. Until the early 1990s the key finan-
cial assets of our economy were subject to the basic regulatory
regime given to us by the New Deal. But beginning in the 1980s,
critical financial assets of our economy were exempted from that
basic regulatory framework.

The rules of that regime are impossible to describe in detail, but
simple to summarize. The most important financial assets were sub-
ject to a rule that required they be traded publicly, transparently,
and subject to antifraud requirements. 6 These rules achieved a num-
ber of objectives. First, they subjected traders to strong incentives
to avoid fraud. Second, they kept key financial institutions from tak-
ing on too much risk. And third, they subjected the trades of criti-
cal financial assets to an important requirement of publicity — each
time a financial asset was bought or sold, the market got something
in return: information about the perceived value of the traded asset.
That information helped the markets function more efficiently.
Robust trading data produced robust prices; robust pricing ensured

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Why Isn't Our Financial System Safe? 71

asset liquidity, at least during relatively normal times, which were
many during the New Deal regulatory regime.

Beginning in the 1980s, however, and for our purposes, espe-
cially the 1990s, this regime changed. It didn't change for the assets
that had been regulated by the New Deal rules: stocks and bonds. It
changed instead for a new class of financial instruments, derivatives,
a tiny portion of the market at first, but one that quickly, like the Blob,
exploded onto the market, and consumed much of its value.

"Derivatives" are assets whose value is derived from some-
thing else, where "something" could mean literally anything. I
could have a derivative that pays me if the price of gold falls below
$1,000. 1 could have a derivative that pays me if the temperature in
Minot, North Dakota, rises above one hundred degrees Fahrenheit.
A derivative is just a bet entered into by two or more parties. The
terms of the bet are limited only by the imagination of the parties.

By calling this a "bet," however, and by invoking remote Ameri-
can villages, I don't mean to question the economic wisdom behind
derivatives. To the contrary: Derivatives serve a valuable purpose.
As with any contract, their aim is to shift risk within a market to
someone better able to carry it. That's a good thing, for the market,
and the economy generally. That we've just seen an economy deto-
nated by derivatives gone wild shouldn't lead us to ban (as if we
could) these financial innovations. It should, however, lead us to be
more careful about them.

At the birth of this innovation, however, no one was thinking
much about being careful. Nor thinking clearly. Too many made
an error of aggregation: even if derivatives enabled individuals
to diversify risk, they couldn't reduce the risk for the system as a
whole. 7 That didn't matter much at first, since the market for deriv-
atives was initially tiny. A collapse in a tiny market doesn't do much
systemic harm.

Technology soon changed all this, making it possible for the
market in derivatives to explode. With the digital revolution distrib-
uting computing power to the masses, masses of financial analysts
on Wall Street were able to use this computing power to concoct

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72 TELLS

ever-more-complicated financial "innovations." With each of these
concoctions, a new and fiercely competitive market would race to
catch up. For a brief time, the innovator had an edge (and huge
profit margin). But very quickly, others copied and improved on
his invention, driving down profits, and driving innovators to find
new derivative markets. (Here was a market with no real intellec-
tual property protection, yet an insanely strong drive to innovate.)
There were hundreds of financial instruments de jure, until the
industry fixed upon a particularly rich and ultimately disastrous
vein (home mortgages) and developed a whole series of assets
backed by real estate mortgages. 8

As this market in derivatives was growing, however, there was
a constant question about whether and how derivatives would be
regulated. With that question came a fight. One side of that battle
thought that derivatives should be treated no differently from any
other asset. The other side saw this as a chance to launch a project
to deregulate financial assets generally.

The war for deregulation was waged by a (somewhat crude)
libertarian, Mark C. Brickell. Though the nation had just suffered a
derivatives-based financial crisis, 9 Brickell, a lobbyist for the deriva-
tives industry, pushed the idea that the best response to the crisis was
general policy to dismantle the New Deal regulations — not just with
derivatives, but with every financial instrument within the economy.

Most thought Brickell's idea insane, and his campaign, hopeless.
Nations reregulate financial services after a collapse; they don't
deregulate. Nonetheless, Brickell pushed, and got his first true vic-
tory in January f993, when "departing [Commodity Futures Trad-
ing Commission] chair Wendy Gramm delivered her 'farewell gift'
to the derivatives industry, signing an order exempting most over-
the-counter derivatives from federal regulation. (A few months
later, she would receive her own farewell gift, being named a direc-
tor of Enron, which was an active trader of natural gas and electric-
ity derivatives.)" 10

Victory at the CFTC, however, was just the first step. There
were a handful of important pieces of legislation working their

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Why Isn't Our Financial System Safe? 73

ways through Congress that would have heavily regulated deriva-
tives. Brickell, as Gillian Tett describes it, "was relentless, and as
the weeks passed, against expectations, his campaign turned the
tide." 11 For Brickell got a completely unexpected gift in his cam-
paign to deregulate derivatives: a new president, neither crude, nor
libertarian, but a key ally nonetheless, Bill Clinton.

Clinton had campaigned with a strong strain of populist rheto-
ric. Wall Street was fearful that populism would translate into sub-
stantial regulation. Once in office, however, Clinton was eager to
convince Wall Street that despite the rhetoric, he was no anti-Wall
Street populist. His administration worked quickly to signal that he
could love Wall Street as completely as the Republicans did. Almost
seamlessly, as historian Kevin Phillips writes, "well-connected Dem-
ocratic financiers stepped easily into the alligator loafers of depart-
ing Republicans." 12 By the end of 1994, and with tacit support by the
administration, Brickell's campaign had killed all four of the anti-
derivatives bills in Congress. 13 And the campaign was not just legisla-
tive: the core agency charged with overseeing this industry, the SEC,
was told by members of Congress to lay off. (When SEC chairman
Arthur Levitt tried to introduce tougher conflict-of-interest rules for
the accounting industry, Senator Phil Gramm, Senate Banking chair,
"threatened to cut the SEC's budget.") 14 Finally, in 1999, President
Clinton gave the industry its most important gift: he signed the law
that abolished the Glass-Steagall Act, 15 thereby confirming the dereg-
ulation already effected by bank regulators. " [Regulators essentially
left the abuses of the 1990s to what Justice Cardozo had called the
'morals of the marketplace.' " 16 "Self-policing," as Tett put it, when
describing an antiderivatives bill in 1994, had "won the day." 17

This was not the only victory for the deregulation movement.
Perhaps as important was the fact that the core instrument facilitat-
ing the derivatives market — asset-backed securities, where the asset
was a mortgage — was exempted from any SEC oversight at all. In
1992 the SEC determined that these assets were not the sort that the
Investment Company Act of 1940 had intended the SEC to regulate.
By a rule, the SEC therefore exempted them. 18 But while these assets

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may not have fit into the regulatory structures of the Investment
Company Act, it certainly made no sense to exempt them from any
of the traditional forms of financial oversight, by any agency at all.
Yet the then- (and now-?) dominant Zeitgeist was not about to enter-
tain a new regulatory structure to fill the gap created by the SEC,
and mortgage companies were certain to block any effort by any
agency to fill that gap. The assets were therefore left untouched.

These are not stories of public officials being bribed. Indeed, the
most complicating and difficult fact of this whole transformation is
how firmly, and independently, many of the key figures believed in
deregulation as an ideal. Some were motivated mainly, or partly, by
money. Some were motivated by a well-justified frustration with the
incredible incompetence of existing regulators and regulations. But
many were motivated by principles, even if, as I believe, those princi-
ples were incomplete and unrealistic. You can call the principled man
wrong, or even negligent. It is hard to call him evil.

We can see this moral complexity in perhaps the most famous

of the firelights that produced this extreme policy of deregulation.

By the middle of the Clinton administration, the volume in deriv-
atives had grown to $13 trillion. (Compare: the total GDP of the
United States in 1998 was $8.7 trillion.) Some at the SEC wondered
whether the SEC should exercise jurisdiction over derivatives. To
the surprise of almost everyone, however, it was a weaker regula-
tory agency, the Commodity Futures Trading Commission (CFTC),
that initially took the lead.

The CFTC reasoned that derivatives functioned much like
"futures contracts," and futures contracts were already regulated
by the CFTC. So the agency, then headed by Brooksley Born, floated
the idea, in a draft release, that it should regulate derivatives, and it
circulated that release to other relevant federal agencies. The docu-
ment reasserted the presumptive jurisdiction of the CFTC over the
market, and "float [ed] the idea of increased supervision." 19

The reaction to Born's draft release was quick and harsh. As
Roger Lowenstein, a financial journalist who wrote for the Wall
Street Journal for more than a decade, describes it:

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Why Isn't Our Financial System Safe? 75

Every banker in Washington complained about the upstart
CFTC. Following Wall Street's urging, Treasury secretary Rubin,
a former cochairman of Goldman Sachs, was extremely hostile.
A posse of regulators scheduled a meeting for late April, for
the purpose of persuading Born to bury the release. Before the
meeting, Larry Summers, Rubin's top deputy at the Treasury
Department, called Born and berated her. Summers huffed,
"There are thirteen bankers in my office. They say if this is pub-
lished we'll have the worst financial crisis since World War II." 20

By the April meeting, tempers had not cooled. Lowenstein:

[Alan] Greenspan got in Born's face, blowing and blustering
until he reddened. Rubin, always more politic, spoke with con-
trolled fury, as if Born's proposal were unsuited to his society.
He repeated that the CFTC was out of its jurisdiction and asked
if Born (who had been elected president of the Stanford Law
Review in 1963, when most of the women in law firms were
still pouring coffee) would like an education in the applicable
law from Treasury's general counsel. 21

Born persisted. She published the draft in May 1999, calling for
more study. Greenspan, Rubin, and Summers reacted immediately,
announcing that they would seek legislation to stop Born and her
CFTC. Shortly thereafter, Born resigned. In November a govern-
ment working group produced a report about derivative regula-
tion and the CFTC. That report found that "to promote innovation,
competition, efficiency, and transparency in OTC derivatives mar-
kets, to reduce systemic risk, and to allow the United States to
maintain leadership in these rapidly developing markets," deriva-
tives should be exempted from all federal regulation. 22 The follow-
ing year, Congress overwhelmingly passed the Commodity Futures
Modernization Act, which expressly forbade the CFTC from reg-
ulating derivatives, and expressly exempted derivatives from any
other state law. Not surprisingly, as Gillian Tett describes, "the

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76 TELLS

derivatives sector was jubilant." 23 But as the Financial Crisis Inquiry
Commission concluded, the legislation "was a key turning point in
the march toward the financial crisis." 24

It's not clear that anyone had a clue about how big this mar-
ket would be when the government first chose to ignore it. Pro-
fessor Frank Partnoy has tried to characterize the scale of the
regulatory change in a way that even lawyers can understand. As
he explained to me, whereas in 1980, close to 100 percent of the
financial instruments traded in the market were subject to the
New Deal exchange-based regulatory regime, by 2008, 90 percent
of the financial instruments traded in the market were exempted
from it. If, as David Moss put it, "the simple truth [was] that New
Deal financial regulations worked," they were not going to work
for almost 90 percent of the assets traded in our financial markets.
We had flipped from a presumptively public market of exchange
to a market where only insiders knew anything real about how the
market worked, or what the assets were worth. That was great for
the insiders, giving them enormous power to leverage into extraor-
dinary profits. 25 It was awful for the rest of us.

The decision to allow this economy of derivatives to run in
secret was extraordinarily silly. For not only would secrecy weaken
the efficiency of the market as a whole (since the public signal of
price helps discipline a market), 26 but it would also lead to a kind
of regulatory arbitrage: because regulation is costly, deals that
were subject to the New Deal regulations would be recast into a
form that could evade those regulations. Indeed, that's what hap-
pened: financial instruments that were "economically equivalent
to many other financial instruments" 27 were substituted for those
"other financial instruments," because unlike those "others," they
were unregulated. As the Financial Crisis Inquiry Commission con-
cluded, "[Gjiven these circumstances, regulatory arbitrage worked
as it always does: the markets shifted to the lowest-cost, least-
regulated havens." 28

Evading regulation has its own value. This led Nobel Prize-
winning economist Merton Miller to the "insight" that "companies

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Why Isn't Our Financial System Safe?

would do swaps not necessarily because swaps allocated risk more
efficiently, but rather because they were unregulated. They could
do swaps in the dark, without the powerful sunlight that securities
regulation shined on other financial instruments." 29 Thus "much
of the $600-plus trillion derivatives market exists," finance profes-
sor Frank Partnoy calculates, "because private parties [were] doing
deals to avoid the law." 30

A speed limit that applies to black cars only will not only
incentivize the sale of colorful vehicles, it will also be a boon to
the paint departments of auto body shops everywhere. That's the
story of Wall Street in the 2000s: While some portion of the mar-
ket for derivatives was no doubt driven by a genuine need for the
particular flexibility of a derivative, a huge proportion was simply
black cars being painted red. The winners in this new market were
the drivers of these freshly painted cars, and the firms that had
done the paint jobs (aka Wall Street). The losers were — surprise,
surprise — the rest of us.

To say that the financial sector escaped the government's regula-
tion, however, is not to say that the sector escaped regulation. As
Alan Greenspan put it: "It is critically important to recognize that

no market is ever truly unregulated The self-interest of market

participants generates private market regulation." 31

Even if the banks didn't have to worry about rules emanating
from the CFTC, SEC, or Federal Reserve, they still had to worry
about the constraints imposed upon them by the competitive mar-
ket. The biggest firms on Wall Street were publicly traded. Rivals
thus set the baseline for the profit each firm was expected to pro-
duce. As firms started down the path of risky behavior, the com-
petitive market within which they operated pushed them even
further. A conservative and sensible strategy is punished in such a
market because, by definition, it doesn't produce the same return
as a risky strategy. A risky strategy earns the market's reward.

These new instruments thus gave Wall Street firms a new
opportunity to compete like hell against one another. But as they

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competed, they assumed risks that, while sensible for them alone,
were not sensible for the economy as a whole. That's because, as
Posner puts it, banks "do not have regard for consequences for the

economy as a whole [T]hat is not the business of business. That

is the business of government." 32

It is this gap between the interests of the banks alone and the
interests of the "economy as a whole" that explains the need for
regulation. "Banks," Posner writes, "can be made safe by regulation,
but that is not their natural state, and so if regulation is removed
they may careen out of control." 33 Thus, commenting upon Alan
Greenspan's confession that he had expected the self-interest of
Wall Street firms to be enough to induce them to behave properly,
Posner writes:

That was a whopper of a mistake for an economist to make. It
was as if the head of the Environmental Protection Agency, crit-
icized for not enforcing federal antipollution laws, had said he
thought the self-interest of the polluters implied that they are
best capable of protecting their shareholders and their equity.
They are indeed the best capable of doing that. The reason for
laws regulating pollution is that pollution is an external cost of
production, which is to say a cost not borne by the polluting
company or its shareholders, and in making business decisions
profit maximizers don't consider costs they don't bear. Banks
consider the potential costs of bankruptcy to themselves in
deciding how much risk to take but do not consider the poten-
tial costs to society as a whole. 34

The banks were thus freed of the burden of federal regulation,
yet driven by the discipline of market regulation to assume far
more risk than was good for the economy. As Posner concludes:

Am I saying that deregulation made bankers and through them
borrowers take risks that were excessive from an overall social
standpoint? Yes, once we recognize that competition will force

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Why Isn't Our Financial System Safe? 79

banks to take risks (in order to increase return) that the eco-
nomic and regulatory environment permits them to take,
provided the risks are legal and profit-maximizing, whatever
their consequences for the economy as a whole. 35

This was also the conclusion of the Financial Crisis Inquiry Com-
mission: "Unchecked, competition . . . can place the entire financial
system at risk." 36 And indeed, as the commission concluded, in this
case it did:

More than 30 years of deregulation and reliance on self-
regulation by financial institutions championed by former Fed-
eral Reserve chairman Alan Greenspan and others, supported
by successive administrations and Congresses, and actively
pushed by the powerful financial industry at every turn, had
stripped away key safeguards, which could have helped avoid
catastrophe. 37

From the perspective of the economy as a whole, the banks thus
took on more risk than was sensible. For the large banks, the risk
was quite sensible — for them, at least when you count an implicit
promise by the government to bail the banks out if the economy
went south. Indeed, as Raghuram Rajan puts it, "What is particu-
larly alarming is that the risk taking may well have been in the best
ex ante interests of their shareholders." 38

It was clear to most that the economy as a whole had this prom-
ise from the Federal Reserve. This was the "Greenspan put," which
referred to the policy by the Federal Reserve to intervene to coun-
teract a collapse in the market. A "one-sided intervention policy
on the part of the Federal Reserve," as Marcus Miller and his col-
leagues put it, led "investors into the erroneous belief that they
[were] insured against downside risk." 39 This is insurance, and as
with all insurance, it could well have encouraged additional risky
behavior.

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80 TELLS

Some believed the promise was even more specific than that.
Why would sophisticated debt holders take such extreme risk?
"The obvious explanation," Raghuram Rajan writes, "is that [they]
did not think they would need to bear losses because the govern-
ment would step in." 40 Simon Johnson and James Kwak point to at
least one case in which the financial executives of one major bank
calibrated the risk they would take based upon the government's
decision to expand the bailout capacity of the Federal Reserve. 41
They and others have pointed to the discount the market gave big
banks for their cost of capital as evidence that the market believed
those banks "too big to fail": "Large banks were able to borrow
money at rates 0.78 percentage points more cheaply than smaller
banks, up from an average of 0.29 percentage points from 2000
through 2007." 42

Harvey Miller, the bankruptcy counsel for Lehman Brothers, was
even more explicit than this: As he told the Financial Crisis Inquiry
Commission, hedge funds "expected the Fed to save Lehman, based
on the Fed's involvement in [previous crises]. That's what history
had proved to them." 43 Again, Rajan: " [T]he problem created by the
anticipation of government intervention is that the bankers, caught
up in the herd's competitive frenzy to cash in on the seemingly
lucrative opportunity, are not slowed by more dispassionate market
forces." 44

The executives knew this. The pressures of the competitive
market, however, made it impossible for them to do differently. As
one CEO put it, "When the music stops, in terms of liquidity, things
will be complicated. But as long as the music is playing, you've got
to get up and dance. We're still dancing." 45

Either of these accounts would explain the second condition
that Posner described earlier: "complacency about asset-price infla-
tion." It's easy to be complacent when you believe the government
has your back — and especially when the market confirms that
belief by giving you a break on the interest rate it charges.

In this sense, the story here is thus the story of both too little
regulation and too much regulation.

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Why Isn't Our Financial System Safe? 81

Too little, since by relaxing the regulatory constraints, the gov-
ernment left the banks vulnerable to the constraints of competi-
tion. Those constraints forced the banks to take on more risk than
was socially sensible, even if privately rational. In the terms of
chapter 5, it forced the banks to ignore the externality of the risk
their gambles would produce for the economy as a whole.

Too much, since the implicit guarantee of a bailout encouraged
the banks to be "complacent about asset-price inflation." As Rajan
writes, "the institutions that took the most risk were those that
were thought to be too systemic to be allowed by the government
to fail." 46 The implicit promise to socialize the risk, as Paul Krug-
man put it, 47 while allowing the banks to privatize the benefits was
the consequence of an intervention by the government — certainly
among the silliest in the history of finance, but an intervention
nonetheless. 48

The combination was deadly — for us, at least, if not for the
banks. For, after the collapse, of course, the government did effec-
tively bail out all but one investment bank, Lehman Brothers. The
surviving banks, however, are ever larger and more profitable than
they were before. Indeed, as Jamie Dimon, chairman and CEO of
JPMorgan Chase, boasted about 2009, "This might have been our
finest year ever." 49

It is for these reasons that I believe the decision by our govern-
ment to deregulate derivatives was foolish. When combined with
the implicit and explicit promise to bail out failure, it encouraged a
radical increase in risk that ultimately blew up the economy.

So what explains this foolish decision? What explains the
power of these deregulatory ideas? Even Alfred Kahn, the architect
of the very first deregulatory initiative during the administration
of President Carter, could only shake his head decades later at the
race to financial deregulation. Banks, he insisted, "were a different

kind of animal They were animals that had a direct effect on

the macroeconomy. That is very different from the regulation of
industries that provided goods and services I never supported

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82 TELLS

any type of deregulation of banking." 50 So why did everyone else,
including supposedly progressive Democrats?

There is no simple answer. As I've argued, the ideology of deregu-
lation flowed for many as a matter of principle. Alan Greenspan, for
example, truly believed that markets would take care of themselves,
that even regulations against fraud were unnecessary. Greenspan
was wrong. He admitted as much. But he was not being guided by
an improper dependence upon money. These were the beliefs of a
true believer at work. They were not the beliefs of a hired gun.

And not just Greenspan: there were plenty in the army of finan-
cial deregulators who were true believers, not just mercenaries. It
may well be, as John Kenneth Galbraith puts it, that "out of the
pecuniary and political pressures and fashions of the time, eco-
nomics and larger economic and political systems cultivate their
own version of truth." 51 But these "versions" are still experienced
as "versions of the truth," not outright fraud. "No conspiracy was
necessary," as Simon Johnson and James Kwak put it in their 2010
book, 13 Bankers: "By 1998, it was part of the worldview of the
Washington elite that what was good for Wall Street was good for
America." 52 As Raghuram Rajan writes, "Cognitive capture is a bet-
ter description of this phenomenon than crony capitalism." 53

Still, pure ideas are not the whole story. Not by a long shot.
The campaign to deregulate the financial services sector was a
campaign, even if it was also an ideology. When it began, none
could have thought it would succeed. But soon after it began, as
I describe in chapter 9, both Democrats and Republicans alike
became starved for campaign funds. And as that starvation grew,
both parties, but the Democrats in particular, found it made both
dollars and sense to believe as the ideologues of deregulation told
them to believe. It paid to believe. And that made believing easy. As
the Financial Crisis Inquiry Commission put it:

As [this] report will show, the financial industry itself played
a key role in weakening regulatory constraints on institutions,
markets, and products. It did not surprise the Commission that

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Why Isn't Our Financial System Safe? 83

an industry of such wealth and power would exert pressure
on policy makers and regulators. From 1999 to 2008, the finan-
cial sector expended $2.7 billion in reported federal lobbying
expenses; individuals and political action committees in the
sector made more than $1 billion in campaign contributions.
What troubled us was the extent to which the nation was
deprived of the necessary strength and independence of the
oversight necessary to safeguard financial stability.'' 4

We could map this change simply by tracking the rise of cer-
tain members of the Democratic Party. New York senator Charles
Schumer is an obvious example. "Over the five election cycles from
1989-90 to 1997-98, Schumer raised $2.5 million in contributions
from securities and investment firms — more than triple the haul of
the runner-up in the House." 55 Schumer's "success," as Jacob Hacker
and Paul Pierson describe in their 2010 book, Winner-Take-All Poli-
tics, "was part of a major development in the evolution of the Demo-
cratic Party's finance: a big push to gain support on Wall Street." 56

The money began to flow, and not just to the Democrats. As
Johnson and Kwak describe, "from 1998 to 2008, the financial sec-
tor spent $1.7 billion on campaign contributions and $3-4 billion
on lobbying expenses; the securities industry alone spent $500
million on campaign contributions and $600 million on lobbying."
That's a faster growth in spending than with any other industry.
Comparing the campaign contributions of the one hundred biggest
contributing firms since 1989, we find contributions from firms in
the financial sector total more "than the contributions of energy,
health care, defense and telecoms combined.'"' 1

As that money flowed, the appetite for the insane policies of
deregulation grew. And in line with the analysis of the previous
chapters, the question we need to ask is whether we believe the
campaign money had anything to do with this insanity. No doubt
the ideology was widespread. But without the money, would it
have prevailed?

No one can know the answer to that question for sure. But

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84 TELLS

there are some important clues. Take the case of Congressman Jim
Leach, from Iowa, who was the leading Republican on the House
Banking Committee in 1994. Leach was convinced that the deriva-
tives market produced systemic risk to the economy. After the
savings-and-loan crisis of the early 1990s, he issued a report that
called for strong regulations of derivatives. That report was criti-
cized by many in the industry. As one industry representative told
the Washington Post, "I have a tough time conceiving of any event
that would make derivatives the culprit of something that really
crashed the system." 58 (Presumably, this is an easier thing for this
industry representative to "conceive" of today.) Most people simply
ignored Leach's report.

The interesting question isn't why the world ignored Jim Leach.
It is instead why, as Frank Partnoy asks, "Leach [was] so different
from his colleagues, who were uninterested in derivatives regula-
tions? Why was Leach alone in publicly warning that derivatives
markets were out of control and might cause a system-wide col-
lapse?" Partnoy answers his own question: "The only discernible
difference between Leach and other members of Congress was

that Leach did not receive financial support from Wall Street

Because he refused to accept contributions from political action
committees, Leach could speak with an independent mind." 59

No doubt we had enough ideological minds guiding govern-
ment policy as it affected Wall Street. But did we have enough inde-
pendent minds in government? And had we had more, would the
government have made the same mistakes it made?

Or, in the terms of this section of the book, does the presence of
the largest amount of campaign cash of any single industry affect
your ability to believe this policy was guided by good sense rather
than the need for campaign dollars?

Where Were the Regulators?

At the end of her fantastic book Fool's Gold (2010), Gillian Tett
quotes JPMorgan Chase's Jamie Dimon at a Davos event: "God

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Why Isn't Our Financial System Safe? 85

knows, some really stupid things were done by American banks

and American investment bankers Some stupid things were

done . . . but it wasn't just the bankers. Where were the regulators
in all this?" 60

Later she quotes some of the original derivatives geniuses from
JPMorgan reflecting to each other on the consequences of their
"innovations": " 'It wasn't our job to stop other banks being so stu-
pid!' another shot back. What about the regulators? Where were
they?'" 61

When I read those passages, however, my first thought was,
"Wow. This is chutzpah."

"Where were the regulators? " Are you kidding, Jamie Dimon?

This is the son who has murdered his parents begging for mercy
from the judge on account of his being an orphan. "Where were
the regulators?" You got the regulators sent home!

The real story of the Great Recession is simply this: Stupid gov-
ernment regulation allowed the financial services industry to run
the economy off the rails. But it was the financial services industry
that drove our government to this stupid government regulation.
They benefited enormously from this policy. And as carefully as
I have tried to frame these puzzles in a way that might allow both
sides some space, this case brings even me to the brink. Strain as I
may, I find it impossible to believe that our government would have
been this stupid had congressmen from both sides of the aisle not
been so desperate for the more than $1 billion in campaign contri-
butions given by individuals and groups affiliated with these firms,
and the $2.7 billion spent by them lobbying. 62

But let me try one last time:

Forget the question of whether the endless campaign funding
bought this particularly silly regulatory result.

Ask instead: Does the fact that more than $1 billion was given
affect your ability to believe that this insanely important if end-
lessly complicated area of regulatory policy was regulated sensibly?
Does it affect your confidence or trust in the system? Or can you
honestly say that the regulatory mistakes of the past three decades

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TELLS

were unrelated to this, the largest single sector of campaign and
lobbying contributions in our government? Raghuram Rajan writes,
"The public has lost faith in a system where the rules of the game
seem tilted in favor of a few." 63 Are you in that public? Does this pat-
tern of contributions help put you there?

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8/23/11 1:19:52 AM

CHAPTER 8

What the "Tells" Tell Us

When my colleagues and I tested whether apparent conflicts
in the interests of professionals affected trust in the work of
those doctors, researchers, and politicians, we didn't say that the
apparent conflict was actually a conflict. We didn't tell the subjects
that it actually affected the results, or that it was even reasonable
to believe that it affected the results. People assumed it, and their
confidence collapsed because of what they assumed.

When I described the conflict in research about the safety of
BPA and cell phones, and linked that conflict to the source of fund-
ing, I didn't tell you that we had any good reason to believe this
correlation proved anything. You assumed it, at least enough to
weaken whatever confidence you had about whether those two
products were safe.

In both cases, I needed only to point to the money — money in
(what was perceived to be) the wrong place — for confidence to
weaken. Not "money," but "money in the wrong place." Describe
the architecture of incentives, and people will infer the causation.
With no good reason, perhaps. But with a reliable regularity that
cannot be denied, and certainly should not be ignored.

This same dynamic is true with each example of government
policy that I have just described. Each is framed in a similar way:
Given a fairly obvious public policy bias, actual policy was bent
differently. Against free markets. Against efficient markets. Against
effective education. Against safe financial markets. Why the policy
was so bent, I didn't say. But after I round the story off in each case
with an account of lobbying and campaign cash, you have a view

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88 TELLS

about why. Or, at a minimum, you are less confident that the why
has much to do with what makes good public policy sense.

These four examples are not small issues. Together, they have
an effect. They confirm the view already held by the vast majority
of Americans. In a poll commissioned for this book, 75 percent of
Americans believe "campaign contributions buy results in Congress."
Three to one, with Republicans (71 percent) just as convinced of this
as Democrats (81 percent). 1 Puzzles plus money produce the view
that the money explains the puzzles.

In a line: We don't trust our government. And until we cre-
ate the conditions under which trust is possible — when, in other
words, the presence of money in the wrong places doesn't inevita-
bly make us doubt — this skepticism will remain. We can't help it. It
will follow psychologically even if it doesn't follow logically.

But is the problem more than a problem of perception? Granted,
the public reads the money as corruption. Is it corruption? Does it
actually bend any results? If it doesn't, then maybe the problem is
the perceiver and not what is perceived. Maybe the solution is a
better understanding of the mechanisms of government, and why
they ought to be trusted, rather than a radical change in how gov-
ernment gets funded. Maybe we, the people, are just confused?

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PART III

BEYOND
SUSPICION

Congress's Corruption

We have good reason to mistrust. The problem with Con-
gress is not just appearance. It is real. It is the product of an
economy of influence that we have allowed to evolve within
our government, within our republic. That economy system-
atically draws members away from the focus, or dependence,
they were intended to have. That dependence — as with vodka
and Yeltsin — is a corruption. It is the corruption that is our
government.

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RepublicLost_HCtextFl.indd 90 {g} 8/23/11 1:19:52 AM

CHAPTER 9

Why So Damn Much Money

Midway through his extraordinary book So Damn Much
Money (2009), Robert Kaiser, associate editor and senior cor-
respondent at the Washington Post, reports a conversation with
Joe Rothstein, campaign manager for former Alaska senator Mike
Gravel. As Rothstein tells Kaiser:

Money has been a part of American politics forever, on
occasion — in the Gilded Age or the Harding administration,
for example — much more blatantly than recently. But . . . : "the
scale of it has just gotten way out of hand." The money may
have come in brown paper bags in earlier eras, but the politi-
cians needed, and took, much less of it than they take through
more formal channels today. 1

If we're going to understand the corruption that is our gov-
ernment, we need first to understand this change. What explains
the explosion in campaign cash? What are its consequences? No
doubt, things cost more today than they did in 1970. But the rise in
campaign spending wildly outpaces the rate of inflation. 2 Between
1974 and 2008 "the average amount it took to run for reelection to
the House went from $56,000 to more than $1.3 million." 3 In 1974
the total spent by all candidates for Congress (both House and Sen-
ate) was $77 million. By 1982 that number was $343 million — a
450 percent increase in eight years. 4 By 2010 it was $1.8 billion — a
525 percent increase again. 5

Why? And how did this rise affect how Congress does its work?

To answer these questions, we need to review a bit of recent

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92 BEYOND SUSPICION

history. There have been real changes in the competitiveness of Amer-
ican democracy that help account for the increase in the demand for
campaign cash. This increase in demand in turn inspired a change in
how campaign cash gets supplied. And that change in supply, I will
argue, has radically altered how our democracy functions.

Demand for Campaign Cash

If the political history of the twentieth century can be divided into
three periods — a period before FDR, the period of FDR to Reagan,
and the period of Reagan to Bush II — our picture of Congress, as
taught to us in universities and as studied most extensively by schol-
ars and political scientists, is the Congress of the middle period,
FDR to Reagan. The Congress that gave us the New Deal. The Con-
gress that enacted the Civil Rights Act. The Congress that would
have impeached President Nixon.

This was a Democratic Congress. In the sixty-plus years
between 1933 and 1995, Democrats controlled the House of Repre-
sentatives in all but four years. It controlled the Senate in all but ten.
If anything happened during this period, it was because the Demo-
crats supported it. When things didn't happen, it was because they
didn't support it strongly enough.

For most of this period, no sane Republican could imagine tak-
ing permanent control of both houses of Congress. Like runners
before Roger Bannister cracked the four-minute mile, most Repub-
licans, and most Democrats, simply believed that such an accom-
plishment was politically impossible. The parties had a certain
character. The nation had a certain character, too. Those two char-
acters were going to produce a political world in which Democrats
controlled and Republicans cooperated. That was the "nature" of
politics in America.

In the late 1960s, nature changed. The seeds to that change
were sown by a Democratic president, elected with the second-
largest contested Electoral College vote in American history: Lyn-
don Baines Johnson.

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Why So Damn Much Money 93

Johnson is likely the twentieth century's most important poli-
tician. Pulling himself up from almost nothing, by means none
would be proud to confess, Johnson became a key leader of the
Democrats in Congress. He knew better than most how to play the
game of compromise that moves bills through Congress, and that
moved him to the very top of the United States Senate.

When an assassin's bullet thrust him into the presidency, how-
ever, Johnson changed his game. In his first speech to Congress, he
placed civil rights at the core of his new administration, and hence
at the core of the values of the Democratic Party. The decision to do
this was profoundly controversial. In a six-hour meeting before the
speech, Johnson was advised strongly against making civil rights so
central to his administration. As described by Randall Woods, John-
son was told, "Passage [of the Civil Rights Act] . . . looked pretty hope-
less; the issue was as divisive as any . . . ; it would be suicide to wage
and lose such a battle." The safe bet was against the fight. Johnson
replied, "Well, what the hell is the presidency for? " 6 These were not
the words of a triangulator from the U.S. Senate, but of a man who
had grown tired of that game, and wanted to try something new.

When he decided to make civil rights central to his party's
platform, Johnson knew that he was forever changing the polit-
ical dominance of the Democrats. His decision to pass the most
important civil rights legislation in history was a guarantee that the
Republicans would again become competitive. Yet his loyalty was
more to truth, or justice, or his legacy — you pick — than to party
politics. To that end, whichever it was, he was willing to sacrifice
a Democratic majority of tomorrow in order to use the Democratic
majority of today. 7

I don't mean to suggest that racism made Reagan possible. To
the contrary: it was a wide range of focused and powerful ideas,
first born in the idealism of politicians such as Goldwater and pub-
lic intellectuals such as William F. Buckley, that made the new
Republican Party compelling. I remember well the power of those
ideas. I was a rabid Reaganite, and the youngest elected member of
a delegation at the 1980 Republican Convention.

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94 BEYOND SUSPICION

But there's no doubt that this decision by Johnson strength-
ened the Republican Party by alienating a large number of not-yet-
enlightened southern Democrats. That alienation encouraged a
Republican return. And when Ronald Reagan rode a powerful set
of ideals to power — none of them explicitly tied to race — he gave
to all Republicans an idea that only dreamers in 1950 would have
had: that their party could retake control of Congress. That it might
once again become the majority party.

It was 1994 when this dream was finally realized. With the energy
and passion of Newt Gingrich, with the ideals of a "Contract with
America," and with a frustration about a young, triangulating Demo-
cratic president, the Republicans swept Congress. For the first time
since 1954, the Republicans had control of both houses.

The Gingrich election changed everything: By putting the con-
trol of Congress in play, it gave both Republicans and Democrats
something to fight to the death about. Whereas a comfortable, even
if not ideal (for the Republicans, at least) detente had reigned for
the prior forty-something years, now each side could taste major-
ity status — or, perhaps more important, minority status. Congress
was up for grabs. And between 1995 and 2010, control of Congress
changed hands as many times as it had in the forty-five years before.

It was at this moment that the modern Congress — call it the
"Fund-raising Congress" — was born. The Republicans came to power
raising an unheard of amount of money to defeat the Democrats.
Republicans in 1994 received $618.42 million (up from $534.64 mil-
lion in 1992) in contrast to Democrats' $488.68 million (down from
$498.45 million in 1992). 8 In the four years between 1994 and 1998,
Republican candidates and party committees raised over $1 billion. 9
Never before had a party come anywhere close.

This fund-raising in turn changed what leadership in both par-
ties would mean: if leaders had once been chosen on the basis of
ideas, or seniority, or political ties, now, in both parties, leaders
were chosen at least in part on their ability to raise campaign cash.
Leading fund-raisers became the new leaders. Fund-raising became
the new game.

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Why So Damn Much Money 95

Campaigns now were not just about who won in any particular
district; they were also about which party would control Congress.
This control has its own value — especially if, as John Lott argues,
the government is handing out more favors, or, in the words of
economists, "more rents." 10 Such rents drive demand for control. As
corporate law scholars would describe it, they make the "control
premium" all the more valuable. 11

At the same time that demand for winning was increasing, the
core costs of campaigns were increasing as well. Part of the reason
for this change was the rising cost of media. But a bigger part was
an advance in campaign technology. The machine of politics was
more complicated and more expensive. "Campaigns dependent on
pollsters, consultants, and television commercials," Kaiser notes,
"were many times more expensive than campaigns in the prehis-
toric eras before these inventions took hold So congressmen and

senators who used the new technologies . . . quite suddenly needed
much more money than ever before to run for re-election." 12

These two changes together — if not immediately, then certainly
over a very short time — put the monkey on the back of every mem-
ber of Congress. An activity, despised by most, that for most of the
history of Congress was a simple road stop — fund-raising — now
became the central activity of congressmen. Each member had to
raise more, not just for his own seat but also for his own party.
Yet because the most obvious solution to this increase in demand
for campaign cash — collecting more from each contributor — was
not legally possible, the only way to raise more money was to
scurry to find more people to give. 13 Congress had tried to limit
political expenditures in 1974. 14 The Supreme Court had struck
down that limit, while upholding the limit on contributions. As
Professor James Sample describes it, quoting Professors Pam Kar-
lan and Sam Issacharoff, "The effect is much like giving a starv-
ing man unlimited trips to the buffet table but only a thimble-sized
spoon with which to eat: chances are great that the constricted
means to satisfy his appetite will create a singular obsession with
consumption." 15

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96 BEYOND SUSPICION

"No rational regulatory system," Issacharoff writes, "would seek
to limit the manner by which money is supplied to political cam-
paigns, then leave . . . spending uncapped." 16 Yet ours did. And the
result, as Josh Rosenkranz puts it, was a system that turned "decent,
honest politicians [into] junkies." 17

Junkies.

And as junkies, they became ever more disciplined in the feed-
ing of their addiction. That discipline, in turn, changed them, and
the political world they inhabited.

Supply of Campaign Cash: Substance

As the demand for campaign cash rose, the political economy for
its supply changed. The Fund-raising Congress became different
from Congresses before. Its values and its ideals, at least as they
related to raising campaign funds, were different.

One part of this difference was substantive: the political mes-
sage of both parties changed in a direction that enhanced the abil-
ity of each to raise campaign funds.

First, the economic message of Democrats became much
more pro-business. 18 Beginning almost immediately after the 1994
Republican sweep, leaders in the Democratic Party launched a
massive campaign to convince corporate America that the Demo-
crats could show them as much love as the Republicans tradition-
ally had. As I described in chapter 7, President Clinton led the
campaign, especially on Wall Street, as his administration worked
feverishly to convince Wall Street funders that Democrats were as
convinced of the need for deregulation as Republicans were. At
least with respect to the economy, America didn't have two major
parties anymore. Instead, as Dan Clawson and his colleagues wrote:
"The country. . .has just one: the money party." 19 The Democrats'
"populist tradition," Hacker and Pierson describe, "more and more
appeared like a costume — something to be donned from time to
time when campaigning — rather than a basis for governing." 20

This change is familiar and extensively debated. So, too, is the

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Why So Damn Much Money 97

question of its causation. Many "new Democrats" defend the pro-
business shift on grounds of principle. Many more find this expla-
nation a bit too convenient. But whether the initial shift was for
the money or not, as the shift in fact did produce more money, the
change was reinforced. Given the increasing dependency on cash,
the cause was conveniently ignored.

Second, and less frequently remarked, the noneconomic mes-
sages of both Democrats and Republicans became more extreme.
Conservatives on the Right became (even to Reagan Republicans)
unrecognizably right-wing. And many on the Left grabbed signa-
ture liberal issues to frame their whole movement. It may be true
that the Right moved more than the Left did, 21 but both sides still
moved.

The reasons for this shift are many, and complicated. But with-
out hazarding a strong claim about causation, it is important to rec-
ognize that for both the Right and the Left, a shift to the extremes
made fund-raising easier. Direct marketers told campaigns that a
strong and clear message to the party base is more likely to elicit a
large financial response than a balanced, moderate message to the
middle. Extremism, in other words, pays — literally. As one study
summarized the research, "An incumbent's ideological extremism
improves his or her chances of raising a greater proportion of funds
from individual donors in general and small individual contributors
in particular. Extremism is not the only way to raise money, [ . . .
but] to some legislators, extremism is an advantage." 22

But, you wonder, doesn't extremism hurt a candidate's chances
with swing voters?

Of course it does. But that doesn't matter if swing voters don't
matter — which they don't in so-called "safe seats." Safe seats are
gerrymandered to produce no realistic possibility for one party to
oust the other. Throughout this period, at least 85 percent of the
districts in the House remained safe seats. In those districts at least,
the fund-raisers had a comfortable cushion within which to mes-
sage to the extremes. The demand for fund-raising plus the supply
of safe seats meant American politics could afford to become more

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98 BEYOND SUSPICION

polarized, as a means (or at least a by-product) of making fund-
raising easier. 23

To claim that American politics became more polarized, how-
ever, is not to say that America became more polarized. Politically
active Americans don't represent America. As Morris Fiorina and
Samuel Abrams write, "The political class is a relatively small pro-
portion of the American citizenry, but it is . . . the face that the media
portray as an accurate image of the American public. It is not." 24

Instead, the distribution of political attitudes for most Ameri-
cans follows a classic bell curve. As Hacker and Pierson summa-
rize the research, "the ideological polarization of the electorate as
a whole — the degree of disagreement on left-right issues overall —
is modest and has changed little over time," 25 even though "the
two parties are further apart ideologically than at any point since
Reconstruction." 26

Yet even though these activists are "not like most people,"
power in the American government gets "transferred to [the] polit-
ical activists." 27 Not just because "only zealots vote," 28 but increas-
ingly because the zealots especially fund the campaigns that get
people to vote. Fund-raising happens among the politically active
and extreme, and that puts pressure on the extremists to become
even more extreme. As Fiorina and Abrams put it, "the natural
place to look for campaign money is in the ranks of the single-issue
groups, and a natural strategy to motivate their members is to exag-
gerate the threats their enemies pose." 29

In this odd and certainly unintended way, then, the demand for
cash could also be changing the substance of American politics.
Could be, because all I've described is correlation, not causation.
But at a minimum the correlation should concern us: On some
issues, the parties become more united — those issues that appeal
to corporate America. On other issues, the parties become more
divided — the more campaign funds an issue inspires, the more
extremely it gets framed. In both cases, the change correlates with
a strategy designed to maximize campaign cash, while weakening
the connection between what Congress does (or at least campaigns

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Why So Damn Much Money 99

on) and the potential needs of ordinary Americans. So long as there
is a demand for endless campaign cash, one simple way to supply
it is to sing the message that inspires the money — even if that mes-
sage is far from the views of most.

Supply of Campaign Cash: New Norms

An increasing pressure to raise money correlates not only with
changing party policies, but also with radically different congres-
sional norms.

Consider, for example, the case of Senator Max Baucus (D-Mont.;
1978- ), chairman of the Senate Committee on Finance, arguably
the most powerful senator during the debate over the details of
Obama's heath care program. Between 2003 and 2008, Senator
Baucus raised more than $5 million from the financial, insurance,
and health care industries — precisely the industries whose regula-
tion he oversees. 30 According to Public Citizen, between 1999 and
2005, "Baucus took in more interest group money than any other
senator with the exception of Republican Bill Frist." 31 Baucus is not
embarrassed by this fact. Indeed, he should be proud of it. It is a
measure of his status, and the power he yields. It is a way to demon-
strate that power: they give to him because of it.

Compare Baucus to another powerful committee chairman,
Mississippi senator John Stennis (D-Miss.; 1947-1989). As Robert
Kaiser describes, in 1982, Stennis was chairman of the Armed Ser-
vices Committee. That committee oversaw the spending of hun-
dreds of billions of defense dollars. But when Stennis was asked
by a colleague to hold a fund-raiser at which defense contractors
would be present, Stennis balked. Said Stennis: "Would that be
proper? I hold life and death over those companies. I don't think it
would be proper for me to take money from them." 32

The difference between Stennis and Baucus is not idiosyncratic. It
reflects a change in norms. Stennis was no choirboy. But his hesitation
reflected an understanding that I doubt a majority of Congress today
would recognize. There were limits — even just thirty years ago — that

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100 BEYOND SUSPICION

seem as antiquated today as the wigs our Framers wore while draft-
ing the Constitution. As Congressman Jim Bacchus (D-Fla.; 1991-
1995) said of the practice of raising money from the very people you
regulate, it "compromises the integrity of the institution." 33 After that
practice became the norm, Senator Chuck Hagel (R-Neb.; 1997-2009)
commented: "There's no shame anymore. We've blown past the ethi-
cal standards, we now play on the edge of the legal standards." 34

Again, it is hard to say with integrity that one thing caused the
other. We just don't have the data to prove it. The most that we
can say is that the new norms make fund-raising easier just at the
moment when the demand for raising funds rises dramatically.
That should concern us.

Supply of Campaign Cash: New Suppliers

The important story of the last thirty years, however, is not just about
political parties whistling a new (and more financially attractive)
tune. Nor is it about politicians getting more comfortable with lever-
aging power into campaign cash. The most important bit is the rise
of a new army of campaign cash suppliers happy and eager to oblige
policymakers with the wonder of their rainmaking techniques.

Some of these suppliers are relatively benign. Campaigns have
finance committees, with increasingly professional fund-raisers
at the top. These fund-raisers deploy the best techniques to raise
money. Those techniques may tilt the message of the campaign
slightly. But at least these fund-raisers are the agents of the candi-
date. They have just one boss, and their interest is in advancing the
interests of that boss.

Some of these suppliers, however, are not so benign. For some
are not agents of the candidate or the campaign. Instead, a critical
and newly significant part of this army of campaign cash suppliers
works not for the candidate, but for special-interest clients. Their
salary is paid not by a campaign, but by a firm that sells their ser-
vices directly to interests eager to persuade policymakers to bend
policy in one way or another.

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Why So Damn Much Money 101
Enter the modern American lobbyist.

Lobbying, of course, is not new to the American republic. The
moniker likely dates to President Grant, but the practice certainly
predates him. Grant would sit with friends for hours in the lobby at
the Willard Hotel "enjoying cigars and brandy." 35 Influence peddlers,
or "those lobbyists," 36 as Grant called them, would approach him
while he sat there. Grant's sneer, however, suggests correctly that
the relationship of these "peddlers" to democracy has always been
uncertain, and for many, troubling. Georgia's constitution explic-
itly banned the lobbying of state legislators in 1877. 37 The Supreme
Court tried to staunch at least one brand of lobbying three years
before, in Trist v. Child (1874), when it invalidated contingency
contracts for lobbyists. As the Court wrote,

If any of the great corporations of the country were to hire
adventurers who make market of themselves in this way, to pro-
cure the passage of a general law with a view to the promotion
of their private interests, the moral sense of every right-minded
man would instinctively denounce the employer and employed
as steeped in corruption, and the employment as infamous. If
the instances were numerous, open and tolerated, they would
be regarded as measuring the decay of the public morals and
the degeneracy of the times. 38

"Degeneracy" notwithstanding, even without contingency con-
tracts, the industry has thrived, especially as the reach of govern-
ment has grown.

For most of the history of lobbying, the techniques of lobbyists,
and their relationship to Congress, were, in a word, grotesque. Well
into the twentieth century, lobbyists wooed members with wine,
women, and wages. Congressmen were lavishly entertained. They
frequented "cat houses" paid for by lobbyists. 39 They kept safes
in their offices to hold the bags of cash that lobbyists would give
them. 40 And late into the twentieth century, they were taken on
elaborate junkets as a way to "persuade" members of the wisdom in

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102 BEYOND SUSPICION

the lobbyists' clients' positions. 41 If the aim of the lobbyist, as Ken-
neth Crawford colorfully described it in 1939, was to "burn [the]
bridges between the voter and what he voted for," 42 for most of its
history, there were no obvious limits on the means to that burning.

Including flat-out bribes (which were not even illegal in Con-
gress until 1853) 43 Throughout the nineteenth century, and well
into the twentieth, lobbyists paid "consulting fees" to members of
Congress — directly. 44 In the early nineteenth century, Congress-
man Daniel Webster wrote to the Bank of the United States — while
a member of Congress voting on the very existence of the Bank of
the United States — "If it be wished that my relation to the Bank be
continued, it may be well to send me the usual retainers." 45 That
example was not unique. Members of Congress would expressly
solicit personal payments from those they regulated. 46 Crawford
quotes a letter from Pennsylvania Republican George Washington
Edmonds to the official of a shipyard dependent upon government
contracts: "As you undoubtedly know, a Congressman must derive
some of his income from other sources than being a member of
the House, and in this connection I would like to bring to your
attention the fact that my secretary and myself have a company in
Philadelphia. Please put us on your inquiry list for materials in con-
nection with ships." 47

Yet when lobbying was this corrupt, perhaps counterintuitively,
its effect was also self-limiting. Though these practices were not
uncommon, they were still (at least after 1853) illegal. Lobbyists
and members had to be discreet. There may have been duplicity,
but there were limits. The payoffs could not be so obvious. And
almost as a way to minimize the wrong, the policies bent by this
corrupt practice had to be on the margins, or at least easily ignored.
There are of course grotesque stories, especially as they touched
land and railroads. But in the main, the practices were hidden, and
therefore limited. They knew shame.

Today's lobbyist is not so rogue. It is an absurd simplification and
an insult to the profession to suggest that the norms of the industry
circa 1890 have anything to do with the norms of the profession

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Why So Damn Much Money 103

today. The lobbyist today is ethical, and well educated. He or she
works extremely hard to live within the letter of the law. More than
ever before, most lobbyists are just well-paid policy wonks, expert
in a field and able to advise and guide Congress well. Regulation
is complex; regulators understand very little; the lobbyist is the
essential link between what the regulator wants to do and how it
can get done. Indeed, as we'll see more later, much of the lobbyist's
work is simply a type of legislative subsidy. 48 Most of it is decent,
aboveboard, the sort of stuff we would hope happens inside the
Beltway. The ordinary lobbyist today is a Boy Scout compared with
the criminal of the nineteenth century. He has as much in common
with his nineteenth-century brother as Mormons have with their
nineteenth-century founders.

Yet as lobbying has become more respectable — and this is the
key — it has also become more dangerous. The rent seeking that
was hidden and careful before is now open and notorious. No one
is embarrassed by what the profession does, because everything
the profession does is out in the open for all to see. Indeed, almost
literally: since 1995 no profession has been required to disclose its
activities more extensively and completely than lobbyists.

But as this practice has become more professional, its effect on
our democracy has become more systemic. And the question we
need to track is what that systemic effect is. The lobbyist today may
be best understood as providing a mere "subsidy" to the legislature —
advice, research, support, guidance for issues the legislators already
believe in. But one of those subsidies has the potential to corrupt
the whole process. As Robert Kaiser describes best, in at least the
last thirty years, the demand for campaign cash has turned the lob-
byist into a supplier. 49 Not so much from the money that lobbyists
give directly — though lobbyists (and their spouses and their kids) of
course give an endless amount of money directly. But instead from
the funding they secure indirectly — from the very interests that hire
them to produce the policy results that benefit those interests.

In a way that is hard to see (because so pervasive), and cer-
tainly hard to model (because so complex), lobbyists have become

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104

BEYOND SUSPICION

the center of an economy of influence that has changed the way
Washington works. They feed a frantic dependency that has grown
among members of Congress — the dependency on campaign
cash — but they can feed that dependency only if they can provide
something of value to their clients in return. The lobbyists are
funding arbitrageurs. They stand at the center of an economy. We
can draw that economy like Figure 7:

LOBBYISTS

FIGURE 7

On the one side of this economy are the members, frantically
searching for campaign cash. On the other side are interests that
increasingly find themselves needing or wanting special favors from
the government. As government grows, as it has, "its tentacles in every
aspect of American life and commerce," then "no serious industry or
interest can function without monitoring, and at least trying to manip-
ulate, Washington's decision makers." 50 These manipulators make
themselves essential to the extent that they provide a suite of essential
services — including, for many, the channeling of campaign cash.

As Kaiser describes, "The more important money became to the
politicians, the more important its donors became to them. This
was a boon to [the lobbyists] . 'The lobbyists are in the driver's seat,'
observed Leon Panetta. They basically know that the members
have nowhere else to turn' for money. . . . Lobbyists had become
indispensable to politicians." 51

At the center of this funding economy lie earmarks. Candidate
Obama may have been right in 2008 when he said that earmarks are

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Why So Damn Much Money 105

a very small portion of the overall federal budget — less than 2 percent
of the 2005 budget. 52 But Senator McCain was certainly right when
he said that the percentage itself is beside the point. The important
question about earmarks isn't their absolute size relative to the federal
budget. The important question is how easily the value of those ear-
marks can be privatized, so that, in turn, they can benefit the (cam-
paign cash) interest of the congressman: If a congresswoman could
secure a $10 million earmark benefiting Company X, how easily can
some of the value of that $10 million be channeled back to her cam-
paign? Not directly, and not illegally, but if a congressman is going to
make the president of Acme, Inc., $10 million happier, is there some
way that some of that "happiness" can get returned? How sticky can
the favor be made to seem? How fungible? And most important, once
the dance to effect that translation gets learned, how easily can it be
applied to other policy issues, not directly tied to earmarks?

The answer to these questions is obvious and critical: If the
only actors involved in this dance are members of Congress and
the special interest seeking favor, then the dance is quite difficult,
at least within the bounds of legality. But if there is an agent in
the middle — someone who works not for the congressman but for
many special interests seeking special favors from Congress — the
dance becomes much, much easier, since there are obvious ways
in which it can happen well within the boundaries of federal law.

To see how, we must first address an assumption that tends
to limit imagination about how this economy of influence might
work.

Too many assume that the only way that government power
can be converted into campaign cash is through some sort of quid
pro quo. Too many assume, that is, that influence is a series of
deals. And because they imagine that a transaction is required, too
many are skeptical about how vast or extensive such an economy
of influence could be — first, because there are laws against this
sort of thing, and second, because almost every single member of
Congress, Democrat and Republican alike, strikes any one of us as
clearly above this sort of corruption.

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106

BEYOND SUSPICION

There are laws against quid pro quo bribery. These laws are, in
the main, respected. Of course there are exceptions. Consider this
key bit of evidence in the prosecution of Randy "Duke" Cunning-
ham, the Vietnam War Top Gun fighter pilot turned congressman
who promised in his 1990s campaign a "congressman we can be
proud of" (Figure 8).

j/l Ra&^JDuke'' Cunningham

A a xife: HbusE of Representatives

f W A Washington, D c 2m5
t-V I y/\ (202) 225-5452
/I/I 4-\) (760) 737-8438

ISA /IwHOUSt-GOV/CUNNlNGHAM

FIGURE 8

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Why So Damn Much Money 107

Look at the numbers: The first column represents the size of the
government contract (in millions) the congressman was promis-
ing. The second column reports the size of the bribe (in thousands)
necessary to get that contract. "BT" refers to a yacht. I'm no expert,
but I know enough to say: this is not genius.

There are more Randy "Duke" Cunninghams or William Jeffer-
sons in Congress, no doubt. But not more than a handful. I agree
with Dennis Thompson that ours is among the cleanest Congresses
in the history of Congress. 53 And if the only way that government
power could be converted into campaign cash were by crossing
the boundaries of criminal law, then there would be no book to
write here. If the only possible "corruption" were the corruption
regulated by bribery statutes, then I'd be the first to insist that ours
is not a corrupt Congress.

Yet there is an obvious and overwhelming argument against the
idea that corruption needs a transaction to work. Indeed, there is
an argument — and it is the core argument of this book — that the
most significant and powerful forms of corruption today are pre-
cisely those that thrive without depending upon quid pro quos for
their effectiveness.

This argument can be proven in the sterile but powerful lan-
guage of modern political science. Justin Fox and Lawrence
Rothenberg, for example, have modeled how a campaign contri-
bution "impacts incumbent policy choices," even if the candidates
and funders can't enter into a quid pro quo arrangement. 54 But the
argument is much more compelling if we understand the point in
terms of our own ordinary lives. Each of us understands how influ-
ence happens without an economy of transactions. All of us live
such a life all the time.

Economies, Gift and Otherwise

Think about two economies, familiar to anyone, which we might
call, taking a lead from Lewis Hyde, a gift economy and an exchange
economy. 55

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108 BEYOND SUSPICION

A gift economy is a series of exchanges between two or more
souls who never pretend to equate one exchange to another, but
who also don't pretend that reciprocating is unimportant — an
economy in the sense that it marks repeated interactions over
time, but a gift economy in the sense that it doesn't liquidate the
relationships in terms of cash. Indeed, relationships, not cash, are
the currency within these economies. These relationships import
obligations. And the exchanges that happen within gift economies
try to hide their character as exchanges by tying so much of the
exchange to the relationship. I give you a birthday present. It is
a good present not so much because it is expensive, but because
it expresses well my understanding of you. In that gift, I expect
something in return. But I would be insulted if on my birthday,
you gave me a cash voucher equivalent to the value of the gift I
gave you, or even two times the amount I gave you. Gift giving in
relationship-based economies is a way to express and build rela-
tionships. It's not a system to transfer wealth.

The gift economy is thus the relationship of friends, or fam-
ily, or different people trying to build an alliance. It was the way
of Native Americans completely misunderstood by their invading
"friends." "An Indian gift," Thomas Hutchinson told his readers in
1764, "is a proverbial expression signifying a present for which an
equivalent return is expected." 56 But the equivalence could never
be demanded. And the equation could never be transparent.

An "exchange economy," by contrast, is clearer and in many
ways simpler. It is the quid pro quo economy. The transactional
economy. The this-for-that economy. It is the economy of a gas sta-
tion, or a vending machine at a baseball park. In exchange for this
bit of cash, you will give me that thing/service/promise. Cash is
the currency in this economy, and as many of the terms of the rela-
tionship as possible get converted, or liquidated, into cash. It is the
economy of commodincation. It is an economy within which we
live much of our lives.

As I've written elsewhere, 57 following the work of Yochai
Benkler, Hyde, and others, there's nothing necessarily wrong with

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Why So Damn Much Money 109

commodification. Indeed, there's lots that's great about it. As Lewis
Hyde puts it,

It is the cardinal difference between gift and commodity
exchange that a gift establishes a feeling-bond between two
people, while the sale of a commodity leaves no necessary con-
nection. I go into a hardware store, pay the man for a hacksaw
blade and walk out. I may never see him again. The disconnect-
edness is, in fact, a virtue of the commodity mode. We don't
want to be bothered. If the clerk always wants to chat about the
family, I'll shop elsewhere. I just want a hacksaw blade. 58

There's plenty that's good about leaving important and large
parts of your life simplified because commodified. The more bits
that are simplified, the more time you have for relationships within
the gift economies in which we all (hopefully!) live.

For in both economies, then, reciprocity is the norm. The differ-
ence is the transparency of that reciprocity. Gifts in this sense are
not selfless acts to another. Gifts are moves in a game; they oblige
others. In the economies that Hyde describes, the game in part is
to obscure the extent of that obligation, but without extinguish-
ing it. No one is so crass as to say, "I gave you a box of pearls; you
need to give me something of equal value in return." Yet everyone
within such an economy is monitoring the gifts given and the gifts
in return. And anytime a significant gap develops, the relationship
evinced by the gifts gets strained.

Against this background, we can understand Washington a bit
better.

In the days of wine, women, and wealth, Washington may well
have been an exchange economy. I doubt it, but it's possible. What-
ever it was, however, it has become a gift economy. 59 For as the
city has professionalized, as reformers have controlled graft more
effectively and forced "contributions" into the open, the economy
of D.C. has changed. If the law forbade D.C. from being an exchange
economy, it could not block its becoming a gift economy. So long as

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110 BEYOND SUSPICION

the links are not expressed, so long as the obligations are not liqui-
dated, so long as the timing is not too transparent, Washington can
live a life of exchanges that oblige without living a life that violates
Title 18 of the U.S. Code (the Criminal Code, regulating bribery). As
Senator Paul Douglas (D-Ill.; 1949-1967) described it fifty years ago:

Today the corruption of public officials by private interests
takes a more subtle form. The enticer does not generally pay
money directly to the public representative. He tries instead by
a series of favors to put the public official under such a feeling
of personal obligation that the latter gradually loses his sense of
mission to the public and comes to feel that his first loyalties are
to his private benefactors and patrons. What happens is a grad-
ual shifting of a man's loyalties from the community to those
who have been doing him favors. His final decisions are, there-
fore, made in response to his private friendships and loyalties
rather than to the public good. Throughout this whole process,
the official will claim — and may indeed believe — that there is
no causal connection between the favors he has received and
the decisions which he makes. 60

This is a gift economy. As Jake Arvey, the man behind Adlai Ste-
venson's political career, defined politics : "politics is the art of put-
ting people under obligation to you." 61 Obligation, not expressed in
legally enforceable contracts, but in the moral expectations that a
system of gift exchange yields.

A gift economy is grounded upon relationships, not quid pro
quo. Those relationships grow over time, as actors within that econ-
omy build their power by developing a rich set of obligations that
they later draw upon to achieve the ends they seek. In this world,
the campaign contribution does not "buy" a result. It cements a
relationship, or as Kaiser describes it, it "reinforce [s] established
connections." 62 As one former lobbyist put it when asked why con-
tributions are made: "Well, it isn't good government. It's to thank
friends, and to make new friends. It opens up channels of commu-

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Why So Damn Much Money 111

It is within this practice of reciprocity that obligation gets built. 64
And as economist Michele Dell'Era demonstrates, the gifts neces-
sary to make this system of reciprocity work need not be large. 65
What is important is that they be repeated and appropriate within
the norms of the context. What is critical is that they are depended
upon.

Unlike traditional gift economies, however, Washington is a gift
economy not because anyone wants it to be. It is a gift economy
because it is regulated to be. Having banned the quid pro quo
economy, the market makers have only one choice: to do the hard
work necessary to build and support a gift economy. The insiders
must learn a dance that never seems like an exchange. Demands
or requests can be made. (Day one: "Congresswoman, our clients
really need you to see how harmful H.R. 2322 will be to their inter-
ests.") But those demands are unconnected to the gifts that are
given. (Day two: "Congresswoman, we'd love to hold a fund-raiser
for you.") Even congressmen (or at least their staff) can put one
and one together. And even when the one doesn't follow the other,
everyone understands how to count chits. There's nothing cheap
or insincere about it. Indeed, the lobbyist is providing something
of value, and the member is getting something she needs. And so
long as each part in this exchange remains allowed, the dance can
continue — openly and notoriously — without anyone feeling wrong
or used.

For this economy to survive, we need only assume a rich and
repeated set of exchanges, among people who come to know and
trust one another. There has to be opportunity to verify that com-
mitments have been met — eventually. In the meantime, there must
be the trust necessary to enable most of the exchange to happen
based on trust alone. It must be the sort of place "where one never
writes if one can call, never calls if one can speak, never speaks if
one can nod, and never nods if one can wink" — precisely how Bar-
ney Frank described D.C., borrowing from the words of Boston pol
Martin Lomasney. 66

As I've already described, the seed for the current version of this

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112 BEYOND SUSPICION

economy was earmarks. The lobbying firm retainers that secured
these earmarks paid for the infrastructure that now gets leveraged
to much greater and more powerful ends. Think of earmarks as
the pianist's scales. They teach technique. But the technique gets
deployed far beyond scales.

It wasn't always so. The modern earmarks revolution was born
recently and in a rather unlikely place. Its inventor was a McGov-
ern Democrat, Gerald S. J. Cassidy, and its first target was a grant to
support a nutrition research center at Tufts University in 1976. Cas-
sidy and Associates "brought something new to an old game," Kai-
ser writes, "by stationing themselves at a key intersection between
a supplicant for government assistance, and the people who could
respond." 67 Once they did, the supplicants recognized they had
tripped upon gold. There were thousands of organizations and
individuals keen to get government money spent in a particu-
lar way. And if the will of these organizations could be achieved
through the camouflage of the earmarking process, they'd be more
than eager to pay for it. To pay, that is, both Cassidy (directly) and
members of Congress (indirectly). 68 By 1984 there were fifteen uni-
versity clients paying large monthly retainers to Cassidy's firm, and
about a dozen more big companies — all seeking earmarks. 69

Cassidy couldn't patent his brilliant insight (or at least he
didn't — who knows what silliness the patent office would endorse).
But as other lobbyists recognized just what was happening, other
firms entered the market he originally staked out. Soon an industry
was born to complement the practice (and profits) of the lobby-
ists of before: the product of that industry was a chance at chan-
neling federal spending; the producers of that product were the
lobbyists; the beneficiaries of that product were the lobbyists, con-
gressmen, and the interests who might benefit from the earmark.
For a time, Cassidy and his colleagues "could truthfully tell clients
that they had never failed to win an earmark for an institution that
had retained them." 70 Never is a sexy word in the world of political
power.

As this economy grew, the lobbyists' role in fund-raising grew as

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Why So Damn Much Money

113

well. As one lobbyist put it expressly, "I spend a huge amount of my
time fundraising . . .A huge amount." 71 That behavior has been con-
firmed to me by countless others, not so eager to be on the record.
"The most vital people" in this economy, Jeff Birnbaum reports,
"aren't the check writers but the check raisers." 72 "Washington has
thousands of lobbyists who raise or give money to lawmakers." 73

At first, some of the old-timers in D.C. worried about the mon-
ster that Cassidy had helped birth. As Senator Robert Byrd (D-W.Va.;
1959-2010) put it:

The perception is growing that the merit of a project, grant
or contract awarded by the government has fallen into a dis-
tant second place to the moxie and clout of lobbyists who help

spring the money out of appropriation bills for a fat fee

Inside the Beltway, everyone knows how the game is played

Every Senator in this body ought to be repulsed by the percep-
tion that we will dole out the bucks if stroked by the right con-

The concern was not just among Democrats. Members from
the middle era of the twentieth-century Congress from both par-
ties were unhappy as they watched Congress become the Fund-
raising Congress. Senator John Heinz (R-Pa.; 1977-1991) asked,
how could he explain to Pennsylvania universities that money was
now handed out "not on the basis of quality, but on the basis of sen-
atorial committee assignments." 75 Senator John Danforth (R-Mo.;
1976-1995) made a similar complaint. 76

As the practice grew, the range and scale of the asks only
increased, and the capacity of congressmen to decide on earmark
requests based on the merits of the request declined substantially.
My former congresswoman, Jackie Speier (D-Calif; 2009- ), asked
me to chair a citizens' commission to review earmark requests.
Almost a dozen civic leaders from the district and I spent hundreds
of hours poring over almost sixty specific requests. The topics of
these requests ranged from streetlights to sophisticated defense

sultant. 74

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114 BEYOND SUSPICION

technologies. The size ranged from the tens of thousands to the
many, many millions.

What struck all of us on this commission was just how impos-
sibly difficult it would be for anyone to weigh one request against
another in a rational way. Moreover, we all were unanimous in
our view that there was something inappropriate about for-profit
companies asking for government help to better market or pro-
duce their products. Yet there were many requests of exactly that
form, and thus many, many opportunities in districts unlike ours
for the beneficiaries of those potential grants to make their grati-
tude known.

But isn't all this illegal? you ask. Even if the exchange merely
increases the probability of a payment in return, isn't that enough
to show quid pro quo corruption?

The answer is no, and for a very good reason: quid pro quo cor-
ruption requires intent. The guilty government official must intend
to pay for the contribution made. That's the meaning of pro: this
pro (for) that. But in the mechanism I'm describing, the repayment
is attenuated, and there is no necessity that it even be intended.
Indeed, as cognitive psychologists have now plausibly suggested
using brain scan technology, it is quite plausible that "intent" to
repay a gift happens completely subconsciously. 77 The member need
not even recognize that she is acting to reciprocate for her action
to be repayment for a previously recognized gift.

Indeed, the only way to clearly separate the gift to the member
from the member's actions in return would be if such gifts were
anonymous. 78 But of course, every contribution that matters today
is as public as a pop star's latest affair. Without doubt, key staffers
in every member's office know who supports their congressman
and who doesn't. More likely than not, the key staffers have made
sure of it.

The gifts within this economy go both ways. Sometimes it is
the lobbyist who secures the gift. Sometimes it is the member who
makes the gift, expecting the recipient will, as the moniker sug-
gests, reciprocate.

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Why So Damn Much Money 115
How would this work?

A large proportion of earmarks have gone to nonprofit institu-
tions. Nonprofit institutions have boards, and board members have
an obligation to work for the interest of that institution. Sometimes
that work includes fund-raising, especially fund-raising to support
new buildings or new research ventures. Members of the board
thus have an obligation to the institution to raise the funds to meet
those objectives.

So imagine you're a board member of a small college in Virginia.
Your board has decided to build a new science center. And just as
you launch on this difficult task, your congresswoman secures an
earmark to fund one building. You, as a board member, have now
received a gift — from this congresswoman. A gift, not a bribe. You
have no obligation toward that congresswoman. To the contrary,
you have something better: you have gratitude toward her, for she
has helped you and your institution.

That gratitude, in turn, can be quite lucrative — for the congress-
woman. When you next receive a fund-raising solicitation from
that congresswoman, it will be harder for you to say no and still
feel good about yourself. She did a favor for you. You now should
do a favor for her in return. The simplest way to return the favor is
to send a check to her campaign committee. So you send a check —
again, not necessarily even aware of how the desire to reciprocate
has been induced by the congresswoman's gift. At no point in this
process has any law been broken. The earmark was not a quo given
in exchange for a quid. No promise of anything in return need have
been made. The earmark is instead simply part of the economy.
Representative Peter Kostmayer (D-Pa.; 1977-1981, 1983-1993)
described this dynamic precisely, and his own recognition of its
stench:

I was once asked by a member of Congress from Pennsylvania
to raise some money for the Pennsylvania Democratic Party,
and he gave me a list of universities that had gotten big fed-
eral grants — academic pork. And he asked me if I would make

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116 BEYOND SUSPICION

calls to the presidents of these universities across the state to
get contributions. I decided I was uncomfortable doing it, and
I didn't do it. 79

My point just now is not to criticize what earmarks support,
though I'd be happy to do that as well. Whether you think the spend-
ing makes sense or not, my point is to get you to see the dynamic
that earmarks support. Or better, the platform they help build.
That platform enables a certain trade. The parties to that trade are
lobbyists, their special-interest clients, and members of Congress.
Because that platform supports a gift economy, the trade it enables
does not cross the boundary of quid pro quo corruption. The lob-
byists never need to make any link explicit. They're proud of their
"professionalism" in respecting that line. Indeed, they are surprised
when anyone expressly crosses it. (Kaiser reports one example that
reveals the understanding: The National Association of Home Build-
ers was upset at a change made to certain pending legislation. In
response, they expressly declared that there would be no further
campaign contributions until the change was undone. "The state-
ment raised eyebrows all over Washington. The NAHB had broken
one of the cardinal rules of the game.") 80

The gains in this system that each of the three parties in the
system — lobbyists, their clients, and members of Congress — realize
should be obvious. (Indeed, there is valuable theoretical work sug-
gesting just why the lobbying game proves to be more valuable
than the bribery game, and why we should expect, over time, a
democracy to move from bribery to lobbying.) 81

But to make understandable the enormous growth in this "influ-
ence cash," now leveraged by the "influence peddlers," we should
enumerate it just to be clear:

• Members of Congress get access to desperately needed
campaign cash — directly from the lobbyists, and indi-
rectly, as facilitated by the lobbyists. They need that cash.
That cash makes much simpler an otherwise insane exis-

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Why So Damn Much Money 117

tence, as it cuts back at least partially on the endless need
of members to raise campaign funds elsewhere.

• The clients of the lobbyists get a better chance at chang-
ing government policy. In a world of endless government
spending and government regulation, that chance can
be enormously lucrative. As researchers at the Univer-
sity of Kansas calculated, the return on lobbyists' invest-
ment to modify the American Jobs Creation Act of 2004
to create a tax benefit was 22,000 percent. 82 A paper
published in 2009 calculates that, on average, for every
$1 that an average firm spends to lobby for targeted tax
benefits, the return is between $6 and $20. 83 Looking at
universities, John M. de Figueiredo and Brian S. Silver-
man found that universities with representation on the
House or Senate Appropriations Committee see a 0.28
to 0.35 percent increase in earmarks for every 1 percent
increase in lobbyist expenditures relative to universities
without such representation. 84 Frank Yu and Xiaoyun Yu
found that "compared to non-lobbying firms, firms that
lobby on average have a significantly lower hazard rate of
being detected for fraud, evade fraud detection 117 days
longer, and are 38% less likely to be detected by regu-
lators." 85 Hill, Kelly, Lockhart, and Van Ness have dem-
onstrated how "lobbying firms significantly outperform
non-lobbying firms." 86 All of these studies confirm what is
otherwise intuitive: as the returns from lobbyists' invest-
ments increase, the willingness to invest in lobbyists will
increase as well. Thus, as journalist Ken Silverstein puts
it, while clients can pay retainers "easily reaching tens
of millions of dollars . . . such retainers are undeniably
savvy: the overall payout in pork is many times that, total-
ing into billions." 87

• Finally, lobbyists get an ever-growing and increasingly
profitable business. The lobbying industry has exploded
over the past twenty years. Its growth and wealth match

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118 BEYOND SUSPICION

almost any in our economy. In 1971, Hacker and Pierson
report, there were just 175 firms with registered lobbyists
in D.C. Ten years later, there were almost 2, 500. 88 In 2009
there were 13,700 registered lobbyists. They spent more
than $3-5 billion — twice the amount spent in 2002, 89 rep-
resenting about $6.5 million per elected representative
in Congress.

And as the lobbying industry grows, D.C. gets rich, too. Nine
of Washington's suburban counties are now listed by the Census
Bureau as among the nation's twenty with the highest per capita
income. 90 As former labor secretary Robert Reich describes,

When I first went to Washington in 1975, many of the restau-
rants along Pennsylvania Avenue featured linoleum floors and an
abundance of cockroaches. But since then the city has become
an increasingly dazzling place. Today, almost everywhere you
look in downtown Washington you find polished facades, fancy
restaurants, and trendy bistros. There are office complexes of
glass, chrome and polished wood; well appointed condos with
doormen who know the names and needs of each inhabitant;
hotels with marble-floored lobbies, thick rugs, soft music, granite
counters; restaurants with linen napkins, leather-bound menus,
heavy silverware. 91

There are many in the lobbying profession, of course, who
deplore the state of the industry. They obviously don't want to
return to the old days. They instead want the industry to evolve
into the profession they dream it could be. As one lobbyist put it,
"Money does make a difference — and it has changed the charac-
ter of this town The truth is that money has replaced brains

and hard work as the way for a lobbyist to get something done for
his client." 92 And many, including the American Bar Association's
Task Force on Federal Lobbying Laws, have recommended "so far
as practicable, those who advocate to elected officials do not raise

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Why So Damn Much Money 119

funds for them, and those who raise funds for them do not advo-
cate to them." 93 As the ABA report states:

[T]he multiplier effect of a lobbyist's participation in fundrais-
ing for a member's campaign (or the member's leadership PAC)
can be quite substantial, and the Task Force believes that this

activity should be substantially curtailed [A] self-reinforcing

cycle of mutual financial dependency has become a deeply
troubling source of corruption in our government. 94

That follows the strong recommendation of President Bush's
chief ethics lawyer, Professor Richard Painter:

The best way to change the profession's reputation for abusing
the system of campaign finance is to end lobbyists' involvement
in campaign finance. When lobbyists bundle their own and cli-
ents' money to buy government officials' attention they under-
mine public confidence not only in government but also in the
quality of lobbyists' advocacy and the merits of their cause. The
bagman image erodes credibility even if credit is due for a lob-
byist's intellectual ability, experience, and integrity. 95

Until these reformers succeed in their reform, however, much
of the value from the service of lobbyists will continue to derive
not so much from the "bagman image" but from the fund-raising
reality.

In this model of influence, campaign cash plays a complicated
role. My claim is not that campaign cash buys any result directly. As
Dan Clawson, Mark Weller, and Alan Neustadtl put it, "Many critics
of big money campaign finance seem to assume that a corporate
donor summons a senator and says, 'Senator, I want you to vote
against raising the minimum wage. Here's $5,000 to do so.' This
view, in its crude form, is simply wrong." 96

Where lobbying does buy votes directly, it's a crime, and I've
already said I don't think (many) such crimes occur.

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120 BEYOND SUSPICION

Instead, campaign cash has a distinctive role, depending upon
which of three buckets it finds itself within:

In the first bucket are contributions that are effectively anon-
ymous. These are gifts, typically small gifts, that a campaign
receives but doesn't meaningfully track. That doesn't mean they
don't keep tabs on the contributor — of course they do, for the pur-
pose of asking the contributor for more. I mean instead that they
don't keep tabs on the particular issue or interest that the contribu-
tor cares about. This is just money that the campaign attracts, but
that it attracts democratically. It is the support inspired by the sub-
stance of the campaign.

The second bucket is the non-anonymous contributions. These
are the large gifts from people or interests whose interests are fairly
transparent. PAC contributions fit in here, as do contributions by very
large and repeated givers. For these contributions, the candidate
knows what he needs to do, or say, or believe. If campaign contribu-
tions are an investment, as many believe, then these investments are
made with a clear signal about the return that is expected.

Finally, the third bucket is most important for the dynamic I am
describing in this chapter: that part for which a lobbyist can claim
responsibility. Again, some of this is direct: the money the lobbyist
gives. But the more important cash is indirect: the part bundled, or
effectively coordinated or inspired by the lobbyist, which, through
channels, the beneficiaries learn of. Everyone who needs to be
thanked is thanked, which means everyone who needs to know
eventually does.

As we move from bucket one to three, risks to the system increase.

Bucket one is the most benign and pro-democratic of the three.
This is the part that the candidate's campaign inspires directly. It's
the direct echo of the policies he or she advances. If there is pan-
dering here to raise more cash, it is public pandering. It's the kind
the opponent can take advantage of. It is the part that feeds politi-
cal debate. And as Robert Brooks put it more than a century ago,
"It is highly improbable that the question of campaign funds would
ever have been raised in American politics if party contributions

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Why So Damn Much Money 121

were habitually made by a large number of persons each giving a
relatively small amount." 97

Bucket two is where the risks begin. For here begins the incen-
tive to shape-shift, and not necessarily in a public way. The under-
standings that might inspire contributions to this bucket can be
subtle or effectively invisible. As Daniel Lowenstein writes, "From
the beginning of an issue's life, legislators know of past contribu-
tions and the possibility of future ones All of these combine in a

manner no one fully understands to form an initial predisposition
in the legislator." 98

Again, it's not easy to achieve such understandings effectively
and legally. To the extent they're expressed, they're crimes. To the
extent they're implied, they can be misunderstood. The rules regu-
lating quid pro quo corruption don't block this sort of distortion.
But they certainly make it much harder to effect.

Bucket three is where the real risk to the system thrives, at least so
long as lobbyists are at the center of campaign funding. For here the
relationships are complicated and long-standing, and their thickness
makes it relatively simple to embed understandings and expectations.

We don't have any good data about how big each bucket is. The
data we do have is (predictably) misleading because of (predictable)
loopholes in the rules. My colleague Joey Mornin used the public
records to try to calculate the size of bundled contributions. 99 He
found large numbers overall. But even that careful analysis under-
states the influence, because the rules don't require a lobbyist to
report a bundle if the event at which it occurs was jointly spon-
sored, and if each lobbyist was responsible for less than $16,000.
So if ten lobbyists hold a fund-raiser at which they bring together
$150,000, none of that need be reported. 100

But critically, size is not necessarily the most important issue.
Influence happens on the margin, and the most powerful are the
contributors who stand there. Even if bucket three were small com-
pared to buckets one and two, if it provided a reliable and substantial
source of funds, then its potential to distort policy would be huge.

This point is important, and often missed. As economists put

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122 BEYOND SUSPICION

it, price is set on the margin. The economic actor with the most
power is the last one to trade. ("What do I need to do to get the
next $10,000?") Thus, even if small, bucket three is where the
action is. The argument is parallel to one about technological inno-
vation made by Judge Richard Posner:

[T]he level of output in a competitive market is determined by
the intersection of price and marginal cost. This implies that
the marginal purchaser — the purchaser willing to pay a price
no higher than marginal cost — drives the market to a consider-
able extent. It follows that a technological innovation that is
attractive to the marginal consumer may be introduced even
though it lowers consumer welfare overall; this is a kind of neg-
ative externality. 101

In the context of contributions to a campaign, the same
dynamic is true. The bending necessary to secure sufficient funds
from bucket three may well make those giving to bucket one less
happy. That's just the nature of these markets on the margin.

Campaign contributions in this model are thus not the only or
even the most significant expenditure that special interests make.
Indeed, lobbying expenditures (2009/2010) were four times as
large as campaign expenditures in 2010. But though "themselves . . .
never enough to create or maintain a viable government relations
operation," as Clawson and his colleagues describe, contributions
are a "useful, perhaps even a necessary, part of the total strategy." 102

And finally, there is one more "useful, perhaps even necessary,
part of the total strategy" that we cannot ignore: the power that
one's future has over one's behavior today. This part was made
obvious to me by an extraordinary congressman from Tennessee,
Democrat Jim Cooper.

First elected to Congress in 1982 (at the age of twenty-eight),
Cooper has a longer perspective on the institution than all but
twenty-nine of its members. 103 Early into my work, Cooper cap-
tured one part of it for me with a single brilliant distillation. As he

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Why So Damn Much Money 123

told me one afternoon, while we were sitting in his office overlook-
ing the Capitol, with a portrait of Andrew Jackson overlooking us:
"Capitol Hill is a farm league for K Street."

Cooper worries that too many now view Capitol Hill as a step-
ping stone to life as a lobbyist — aka K Street. Too many have a busi-
ness model much like my students at Harvard Law School: They
expect to work for six to eight years making a salary just north of
$160,000 a year. Then they want to graduate to a job making three
to ten times that amount as lobbyists. Their focus is therefore not
so much on the people who sent them to Washington. Their focus
is instead on those who will make them rich in Washington.

This, too, is an important change. In the 1970s, 3 percent of
retiring members became lobbyists. Thirty years later, that num-
ber has increased by an order of magnitude. Between 1998 and
2004, more than 50 percent of senators and 42 percent of House
members made that career transition. 104 As of June 2010, 172 for-
mer members of Congress were registered lobbyists. 105 In 2009 the
financial sector alone had 70 former members of Congress lobby-
ing on its behalf. 106 Indeed, as Jeffrey Birnbaum reports, there are
members who are explicit about the plan to become lobbyists. 107
Ken Silver stein reports on one particularly pathetic example:

While still a senator, [Bob] Packwood had confided to his
fatal diaries that he regarded the Senate, where he dwelled for
twenty-seven years, as but a stepping-stone to a more lucrative
career as an influence peddler. Perhaps someday, he mused, "I
can become a lobbyist at five or six or four hundred thousand"
dollars a year. Less than a year after he resigned in disgrace,
Packwood formed a firm called Sunrise Research and was mak-
ing lavish fees representing timber firms and other corporate
clients seeking lower business taxes. 108

The system thus feeds itself. It's not campaign contributions
that members care about, or not directly. It is a future. A job. A way
to imagine paying for the life that other professionals feel entitled

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124

BEYOND SUSPICION

to. A nice house. Fancy cars. Private schools for the kids. This sys-
tem gives both members and their staff a way to have it all, at least
if they continue to support the system.

What exactly is the wrong in what they're doing, given the sys-
tem as it is? The wannabe lobbyists get to do their wonky policy
work. They get to live among the most powerful people in the
nation. Their life is interesting and well compensated. And they
never need to lie, cheat, or steal. What could possibly be bad about
that? Indeed, anyone who would resist this system would be a
pariah on the Hill. You can just hear the dialogue from any number
of Hollywood films: "We've got a good thing going here, Jimmy.
Why would you want to go and mess things up?"

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8/23/11 1:19:52 AM

CHAPTER 10

What So Damn
Much Money Does

Consider two statements by two prominent Republicans. The
first, by Senator Tom Coburn (R-Okla.; 2005- ): "Thousands of
instances exist where appropriations are leveraged for fundraising
dollars or political capital." 1

The second, by former Federal Elections Commission chairman
Bradley Smith: "The evidence is pretty overwhelming that the money
does not play much of a role in what goes on in terms of legislative
voting patterns and legislative behavior. The consensus about that
among people who have studied it is roughly the same as the consen-
sus among scientists that global warming is taking place." 2

To be clear, Smith is a corruption denier, not a global warming
denier. What he is saying is that the evidence from political science
suggests — contrary to Senator Coburn and to the whole thrust of
this book — that the money doesn't matter. Indeed, he says more than
just that: He means to say that anyone who suggests that the money
matters — to "legislative voting patterns and legislative behavior" —
is as crazy as global warming deniers. That no honest scholar (let's
put aside politicians) could maintain that we have any good evidence
to suggest that there's a problem with the current system. That any
honest scholar would therefore focus his work elsewhere.

I've found that people have two very different reactions to Chair-
man Smith's statement. The vast majority react in stunned disbelief:
"Is he nuts?" is the most common retort. It is also among the kind-
est. Almost all of us react almost viscerally to corruption deniers,
just as most (liberals, at least) react to global warming deniers.

A tiny minority, however, react differently. If they're careless in
listening precisely to what Chairman Smith said ("money does not

125

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126 BEYOND SUSPICION

play much of a role in what goes on in terms of legislative voting
patterns and legislative behavior"}, they say something like this:
"Yeah, it is surprising, but the data really don't support the claim
that money is corrupting Congress." And if they're more on the
activist side of the spectrum, and less on the academic side, they're
likely to buttress this observation with something like "So you, Les-
sig, need to take this evidence seriously, and justify your campaign,
since the facts don't support it."

I once confronted this latter demand in a bizarre Washington
context. I had been invited to address a truly remarkable group
called the Lib-Libertarians — a mix of liberal and libertarian D.C.
souls who meet for dinner regularly to talk about common ideas.
Most of them were lawyers. Some were journalists. And some
were in various stages of the revolving and gilded door between
government and the private sector.

I like liberals. (I am one.) I also like libertarians. (If we understand
that philosophy properly, I am one, too.) So I carelessly assumed
that my anti-money-in-politics argument would be embraced by
the collected wise and virtuous souls of that dinner. It wasn't, by at
least a significant chunk. For when I tried to brush off a version of
Chairman Smith's claim, I was practically scolded by the questioner.
How could I "possibly," he asked, "ignore these data?" How could I
"honestly," he charged, "make an argument that doesn't account for
them?"

That scolding is fair. I can't honestly make an argument that
demands we end the corruption that is our government without
honestly addressing "these data."

The Republican senator from Oklahoma is right (not the global
warming denier, Senator James Inhofe [R-Okla.; 1994- ], but
Coburn): There are thousands of "instances ... where appropria-
tions are leveraged for fundraising dollars or political capital." That
defines the corruption that I have described in this book. Nothing
in what I will say in this chapter will undermine that claim.

And Chairman Smith is also, in part at least, right. He is right that
political scientists have not shown a strong connection between

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What So Damn Much Money Does 127

contributions to political campaigns and "legislative voting pat-
terns." There is some contest about the question (much more than
there is about global warming, I'd quibble), but it is fair to say that
there is no consensus that the link has been shown.

Yet the aim of this chapter is to convince you that even if Smith
is (partly) right — even if the political scientists can't see a connec-
tion between contributions and votes — that does not exonerate
Congress from the charge of corruption. Why the political scien-
tists can't see what the politicians do see is obvious enough, and
clear. You can support the reform of Congress without denying the
power of statistical regression. You can be a rootstriker even if you
can't directly see the root.

A Baseline of Independence

Though we describe our government as a "democracy," that's not
precisely what our founders thought they had built. Indeed, for
many (though not for all) at the founding, democracy was a term of
derision, and the Constitution nowhere even mentions it. Instead,
the Constitution speaks of a "Republic." Article IV of the Consti-
tution even guarantees "to every State in this Union a Republican
Form of government."

By a "Republic," our Framers meant a "representative democ-
racy." 3 And one critical component of that representative democracy
(the House) was to be directly elected by the people. (The president
and Senate were independently elected.) These elected officers were
not just potted plants. They were to deliberate and decide upon what
was in the public interest. The public interest: the founding genera-
tion was obsessed with the distinction between private, or special
interests (what Madison called "factions"), and the public or general
good. They believed there was a distinction; they believed the job of
the representative was to see it, and follow it.

To the Framers, this same distinction even applied to citizens.
In their view, citizenship itself was a public office. As the holder
of that office, each of us is charged with voting not to advance our

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128 BEYOND SUSPICION

own private interests, but instead to advance the public's interest.
As Professor Zephyr Teachout summarizes the Framers' view: "In
the worldview of the Framers — a view that persisted in constitu-
tional case law for at least a hundred years — citizenship is a pub-
lic office Citizens can be corrupted and use their public offices

for private gain, instead of public good. They are fundamentally
responsible for the integrity of their government." 4

To modern ears, all this sounds a bit precious. What is the "pub-
lic good"? And what would it mean for a citizen to vote in the public
good, as opposed to in the interest of the citizen?

The answer (for us at least) is that there's no good answer, at
least not anymore. And so did the Framers come to this answer
fairly soon into the life of the new republic. Fairly quickly, as they
saw representative democracy develop, most of them were con-
vinced that their ideal of enlightened self-interest in governing
was, in a word, naive. 5

Yet the Constitution had a fallback. 6 Whatever the "public good"
was, the House of Representatives (and after the Seventeenth
Amendment, so, too, the Senate) was intended to have a specific
dependency. As the Federalist Papers put it — oddly, because in this
context, dependent is used in a positive sense, while in practically
every other instance, the Federalist Papers use dependent and its
cognates in a negative sense — that means a Congress "dependent
upon the People alone." 7 Dependent — meaning answerable to, rely-
ing upon, controlled by. Alone — meaning dependent upon nothing
or no one else.

So in a single line, in a way that frames the core of my claim
that ours is a corrupt Congress, the Framers gave us a "republic";
to them, a republic was to be a "representative democracy"; a "rep-
resentative democracy" was to be "dependent upon the People
alone"; a representative democracy that developed a competing
dependency, conflicting with the dependency upon the people,
would be "corrupt."

That was their aim, as it sets the appropriate constitutional
baseline. 8 To secure their aim, they then erected constitutional

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What So Damn Much Money Does 129

mechanisms to ensure this dependency. These mechanisms did two
things: they weakened the likelihood of other dependencies, and
they strengthened the force of the dependency upon the people.
Consider each in turn.

The Framers weakened the possibility of competing dependen-
cies by expressly blocking other corrupting ties.

• The Ineligibility Clause (Article I, §6, cl. 2) — which Vir-
ginia's George Mason called "the corner-stone on which
our liberties depend " 9 — made it impossible for the presi-
dent to make members of Congress dependent upon him,
by appointing them to civil office while also serving in
the legislature, or by appointing them to offices that had
been created (or the pay increased) during their tenure
in Congress. New Jersey had a similar clause in its consti-
tution, which tied the constitutional device expressly to
a concern about "corruption":

"That the legislative department of this government
may, as much as possible, be preserved from all suspi-
cion of corruption, none of the Judges of the Supreme
or other Courts, Sheriffs, or any other person or persons
possessed of any post of profit under the government . . .
shall be entitled to a seat in the Assembly: but that, on his
being elected, and taking his seat, his office or post shall
be considered as vacant." 10

• The Origination Clause (Article I, §7, cl. 1) expressly
placed the power of the purse in the legislature, thereby
weakening the opportunity of the executive to use federal
spending to make legislators dependent upon him. 11

• The Emoluments Clause (Article I, §6, cl. 2) weakened
the opportunity of any "King, Prince, or foreign State" to
make any member or officer of the United States depen-
dent upon it, by banning gifts from such entities without
the permission of Congress.

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130 BEYOND SUSPICION

In all these cases, as Zephyr Teachout describes, the Framers
were "drawing on the experience of England, where 'the [voters]
are so corrupted by the representatives, and the representatives so
corrupted by the Crown,' ... to avoid financial dependency of one
branch upon another." 12 Constitutional structure was deployed to
avoid corrupting dependencies.

2. The Framers also crafted devices to strengthen the force of
Congress's dependency upon the people.

• Requiring elections every two years for the House was
explicitly understood to bind the House tightly to the
people. (Federalist No. 57: "the House of Representatives
is so constituted as to support in the members an habitual
recollection of their dependence on the people.")

• The First Amendment's requirement that Congress listen
to petitions "for a redress of grievances," meant Congress
wasn't free to ignore the people, even after being bound.

• When the Framers recognized a part of Congress that
was too far from "the People's" control, it weakened
it. The delegates to the convention believed the Senate
was more prone to corruption than the House (in part
because of its small size). Madison thus recommended it
"have less to do with money matters," 13 to avoid an even
stronger temptation to corruption.

This is the work of sophisticated constitutional architects all
aimed at a single end: to establish and protect a link between Con-
gress and "the People alone." A link. A dependency. A dependency
sufficiently strong to ensure the independence of the institution.

It might sound a bit Newspeak to describe "independence" pro-
duced by "dependence." Yet we use the term in just this way all
the time. We say we want an independent judiciary. That doesn't
mean a judiciary that can do whatever the hell it wants. It means a
judiciary dependent upon the law, and not upon the president, or

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What So Damn Much Money Does

131

politics, or whatever else you think might taint a judiciary. Inde-
pendence in this sense simply means the proper dependence. And
for our Framers, again, the proper dependence for a Congress was
"upon the People alone." 14

Of course, just because the Framers believed in something
does not make it right. They (or many of them) believed in slavery.
Most believed in bloodletting. They thought it absurd to imagine a
woman as president.

It is fair, however, to use their ideas as the baseline against
which to judge our own practices. That baseline might be unjust,
no doubt. But if we believe the baseline is just, or sensible, then
when there is deviation from that baseline, we should ask whether
that deviation is something to praise. Does the change bring us to
a better democracy? Or a better republic? Could we justify it — or
even explain it — to the Framers? Or, with integrity, to ourselves?

Our current Congress is far from the Congress our Framers imag-
ined. In a million ways. It doesn't deliberate together, as a whole.
Members don't listen to other members during debate. Each repre-
sentative represents at least twenty times the number of citizens
that representatives at the founding did. Almost half of the Con-
gress returned home after each election cycle in the first century
of the republic. No more than 10 percent do so today. 15

But the difference I want to focus on is the economy of influ-
ence that defines the life of a member. How is the republic altered
because we have allowed this dependency to evolve? How would it
be different if we found a way to remove it?

We can begin to answer this question with a simple exercise:
Imagine yourself in your congresswoman's shoes. Imagine the life
she leads. She has a campaign manager who tells her she needs
to raise hundreds of thousands, maybe millions, of dollars, prefer-
ably long before the next election, so that no one in his right mind
would even think about running against her. So each day she does

Deviations from a Baseline

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132 BEYOND SUSPICION

her bit. A couple of hours here, a couple of hours there, on the
phone with people she doesn't know, asking for money. The rou-
tine would be comical if it weren't so disturbing: A day on Capitol
Hill is comprised of racing to vote on the floor of the House, to a
quick drop in on a committee meeting, and then off to the Hill to
a fund-raising office with a telephone and an operator's headset,
where, until the vote buzzer rings again, she will call and call and
call again.

This life puts enormous pressure on a member. It is pressure that
comes in part from the member herself (she wants to win), and in
part from her staff, from her supporters, and from her party. And
then she meets with a dizzying array of lobbyists, many of whom are
eager to help relieve that pressure. How would that offer of "help"
change what she thought, or what she did? How would it matter?

We don't need a Sigmund Freud here. We all recognize the drive
deep in our bones (or, more accurately, our DNA) to reciprocate. 16
Some of it we see directly. Some of it we don't. The subconscious is
guided by interactions of reciprocity as much as the conscious. We
reciprocate without thinking. We are bent to those to whom we
are obliged, even when we believe, honestly, that we are not. What
Robert Brooks wrote over a century ago we can repeat today: "By
far the worst evil of the present system is the ease with which it
enables men otherwise incorruptible to be placed tactfully, subtly,
and — as time goes on — always more completely under obligations
incompatible with public duty." 17

Sometimes the politicians admit as much. In 1905 an aging sen-
ator Thomas Collier Piatt of New York "acknowledged receiving
cash contributions to his campaigns from the insurance compa-
nies, and in return for that money he admitted that he had 'a moral
obligation to defend them.' " 18

Most of the time, however, they deny it. They insist that their judg-
ment is independent of campaign cash. They insist they haven't been
affected. "It is insulting," I've been told, "to suggest that my actions have
been influenced by my contributors. They have not, and never will be."

America doesn't believe the denials. The vast majority of

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What So Damn Much Money Does 133

Americans believe money buys results in Congress: 75 percent
believe "campaign contributions buy results in Congress." 19 And
this commonsense view is confirmed, albeit more subtly, by
some current members of Congress, and more frequently by for-
mer members of Congress. In an excellent series, the Center for
Responsive Politics has interviewed retired members of Congress
about the influence of money in politics. Again and again, both
Democrats and Republicans insist that of course the money mat-
ters. For example:

Rep. Joe Scarborough (R-Fla.; 1995-2001) (yes, that Joe Scar-
borough): "Across the spectrum, money changed votes. Money
certainly drove policy at the White House during the Clinton
administration, and I'm sure it has in every other administra-
tion too." 20

Sen. Slade Gorton (R-Wash.; 1981-1987, 1989-2001) (Asked:
Have you seen votes in the Senate where you just knew that cer-
tain votes were lining up certain ways because of the money?):
"The answer to that question certainly has been yes." 21

Rep. Tim Penny (D-Minn.; 1983-1995): "There's not tit for tat in
business, no check for a vote. But nonetheless, the influence is
there. Candidates know where their money is coming from." 22

Rep. Mel Levine (D-Calif.; 1983-1993): "On the tax side, the
appropriations side, the subsidy side, and the expenditure side,
decisions are clearly weighted and influenced ... by who has
contributed to the candidates. The price that the public pays
for this process, whether it's in subsidies, taxes, or appropria-
tions, is quite high." 23

Rep. Eric Fingerhut (D-Ohio; 1993-1995): "The completely
frank and honest answer is that the method of campaign fund-
ing that we currently have . . . has a serious and profound impact
on not only the issues that are considered in Congress, but also
on the outcome of those issues." 24

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134 BEYOND SUSPICION

Sen. Bill Bradley (D-NJ.; 1979-1997): "We've reached a point
where nothing but money seems to matter. Political parties
have lost their original purpose, which was to bring people
together . . . and instead they become primarily conduits for

cash." 25

Even when members think they're denying an effect, their
denial just confirms that the effect is real. Former senator Slade Gor-
ton, a supporter of the current system, commented, "It just seemed
to me that those who were trying to buy influence on both sides
were simply wasting their money." 26 Does that mean that those
who bought on only one side were not wasting their money? Or as
Representative Hamilton Fish IV (R-N.Y.; 1969-1995) commented:
"I look at a contribution as a 'thank you' for the position I took, not

as expecting that I would take a position in the future [It was]

a reward, not a bribe." 27 But of course, we use rewards to induce
people to do things they otherwise wouldn't do all the time. Why
not here?

Most of us believe that the money has an influence. Former
members from both political parties confirm it. That influence, we
believe, bends the results of Congress from what they otherwise
would have been. That constitutes, for the vast majority of Ameri-
cans, proof enough of the corruption that is our government. This
is the common view.

As I've said, our common view could be right. It could also be
wrong. Indeed, as I describe in the section that follows, there is
important scholarship that raises real questions about whether we
can say that money in fact bends democracy in the way most of us
feel it does. We need to confront that scholarship to see exactly
what it sees, and exactly what it misses.

0. It Matters Not at All

Some believe that this dependence upon money does nothing. That
it is harmless. Or at least, they insist, we have no good evidence

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What So Damn Much Money Does 135

that this dependence does anything, and since we've got no evi-
dence, we've got no good reason to change it.

By "evidence," these conservatives (with a small c — they could
well be politically liberal; my point is that they're scientifically con-
servative) mean numbers. Statistics. Regressions that show an input
(campaign contributions) and an output (a change in votes). There
is no good evidence, these scholars insist, that campaign contri-
butions are changing political results. There may be many such
contributions. Securing them may well occupy a huge chunk of a
congressman's life. But we don't have the data to support the claim
that this money is buying results that otherwise would not have
been obtained. 28 As Frank Baumgartner and his colleagues summa-
rize the research, there is "no smoking gun, no systematic relation-
ship between campaign contributions and policy success." 29

The most prominent work making this claim is by political
scientists Stephen Ansolabehere, John M. de Figueiredo, and James
M. Snyder. In an important paper published in 2003, "Why Is There
So Little Money in U.S. Politics?," 30 these authors question just
about every strand of the commonsense view that money is buying
results in Congress.

The most important bit of their argument for our purposes ques-
tions whether campaign contributions actually affect legislative
decisions. Ansolabehere and his colleagues first collect about forty
articles that tried to measure the effect of PAC contributions on
congressional voting behavior. Looking across this range of studies,
they conclude, "PAC contributions show relatively few effects." "In
three out of four instances, campaign contributions had no statisti-
cally significant effects on legislation or had the 'wrong' sign. . . ." 31

Ansolabehere and his colleagues then identified a number of
statistical problems in some of the studies they collected. This led
them to perform their own statistical analysis. That analysis used
the voting score produced by the U.S. Chamber of Commerce as the
dependent variable. They then estimated six models that mirrored
the range of their original forty studies and that included campaign
contributions among the independent variables.

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136 BEYOND SUSPICION

Their conclusions are not good for the commonsense view
(even if they sound promising for the republic). While they did find
some evidence that contributions had an effect on voting patterns,
that effect was small relative to other factors. Much of that effect,
moreover, was eliminated once they controlled for voter prefer-
ence. And once they controlled for legislator-fixed effects (such as
the party of the legislator), they were able to "eliminate the effects
of contributions entirely." 32 As they conclude: "Indicators of party,
ideology and district preference account for most of the system-
atic variation in legislators' roll call voting behavior. Interest group
contributions account for at most a small amount of the variation.
In fact, after controlling adequately for legislator ideology, these
contributions have no detectable effects on legislator behavior." 33

In understanding the significance of this claim, we should first
be very careful about what exactly is being argued here. Anso-
labehere and his colleagues are themselves careful to insist that
they are not saying that contributions have no effect. Indeed, as
one version of their paper asserts, "It is still possible that campaign
contributions have significant effects on economic policies." 34 How
would that happen, given the data they've studied?

To raise sufficient funds, candidates might skew policies in ways
preferred by donors. Campaign contributions might therefore
act like weighted votes. And contributors, who are dispropor-
tionately wealthy, might have different policy preferences than
the median voter. 35

We'll return to this hypothesis later in this chapter. For now,
just recognize that all that they are claiming is that the data don't
show the link between PAC contributions and roll call votes, at
least as reflected in the Chamber of Commerce rankings. That may
be because there is no such link. Or it may be because the method
they are using to find that link cannot detect one. In either case,
what they are not saying is what the anti-reform think tank Center
for Competitive Politics reports them as saying — viz., "a substantial

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What So Damn Much Money Does 137

majority of academic research on the subject has shown that there
is little connection between contributions and legislative votes or
actions." 36 "We don't see it" is not the same as "there is nothing
to see."

Ansolabehere and his colleagues' conclusions, moreover, are
not uncontested. Some political scientists do believe that there is
a link between money and results that can be demonstrated by
the numbers alone. 37 Thomas Stratmann, for example, conducted
a meta-analysis of the same forty studies that Ansolabehere and
his colleagues reviewed. That analysis rejected the conclusion
that money does not affect results. 38 Sanford Gordon and his col-
leagues find that an executive's likelihood of contributing to politi-
cal candidates is tied to how sensitive his or her salary is to firm
profitability: the higher the sensitivity, the higher the likelihood
of contributions, reinforcing the suggestion that the contribution
is an investment rather than consumption. 39 Consistent with this
result, in a study of PAC contributions related to the 1984 Deficit
Reduction Act, Sanjay Gupta and Charles Swenson found that firms
whose managers' compensation included earnings-based bonuses
made larger PAC contributions, and that contributions generally
were "positively associated with firm tax benefits." 40 Likewise, Atif
Mian and his colleagues found that the voting patterns on the 2008
Emergency Economic Stabilization Act were strongly predicted by
the amount of campaign contributions from the financial services
industry. 41 Not exclusively, but partially, and certainly enough for
us to wonder whether the money is queering results more gener-
ally. This work provides strong pushback against the theory that
campaign contributions are mere consumption (and therefore
don't affect results), and it explains how such investments could,
consistent with the data, provide a return. 42

But let's assume for the moment that Ansolabehere and his col-
leagues are right. Let's assume the data won't show a clear link
between contributions and results. If that is true, does that fact
exonerate Congress? Are the critics unfair, if Ansolabehere and his
colleagues are correct?

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138 BEYOND SUSPICION

The critics are not unfair. For, even if the political science skep-
tics are right, there are three undeniable effects of this economy of
influence, each of them a reason for concern, and all three together
a demonstration of the urgency there should be in solving it.

1. Distraction

First, and most obviously: the Fund-raising Congress is distracted.

If members spend up to 30 to 70 percent of their time raising
money, 43 that means they have less time to do the sort of things
members of Congress traditionally did. For example, deliberate. If
you compared our Congress in 1792 to the British House of Com-
mons in 1792, we'd fare pretty well. Today, Congress compared to
today's Commons is an embarrassment. The British actually take
time to deliberate as a body (as our Framers intended us to do).
Our Congress does not. Or to read the bills: As Washington lobby-
ist Wright Andrews responded when asked about whether mem-
bers read "most of the bills," "Most of the bills? [They read a]lmost
none of them! Any member that was honest will tell you that." 44 (In
a private session, Bill Gates reported that when he was a congres-
sional page, he read "every bill." That may have been possible in
the 1960s, even for mere mortals [which Gates plainly is not] , but
it is literally impossible today: the complexity of the bills Congress
considers is vastly greater than in the past. The Senate version of
the health care reform bill, for example, was more than two thou-
sand pages long when introduced.) 45 Instead, the job of members
is increasingly that of raising campaign funds. As Fritz Hollings
(D-S.C; 1966-2005) wrote after he retired from the Senate:

I had to collect $30,000 a week, each and every week, for six
years. I could have raised $3 million in South Carolina. But to
get $8.5 million I had to travel to New York, Boston, Chicago,
Florida, California, Texas and elsewhere. During every break
Congress took, I had to be out hustling money. And when I was
in Washington, or back home, my mind was still on money. 46

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What So Damn Much Money Does

139

Even twenty years ago, then- Senate majority leader Robert Byrd
wanted reform for campaign finance because the Senate had become
"full-time fund-raisers instead of full-time legislators." 47 "Members," as
Anthony Corrado of Brookings describes, "are essentially campaign-
ing and raising money all the time." 18 This is an important change.
"For most of American history," Norman Ornstein and Thomas Mann
write, "campaigns generally were confined to the latter half of elec-
tion years." 49 Now that the campaign is permanent, the other work
that was customarily done during the balance of the term must, in
some ways, suffer.

The numbers support what common sense predicts. Between
1983 and 1997 the total number of non-appropriations oversight
committee meetings fell from 782 to 287 in the House, and 429 to
175 in the Senate. 50 Total committee meetings tanked as well. Aver-
aging for each decade since the 1970s is shown in Figure 9: 51

COMMITTEE MEETINGS

7000

House

5250

3500

1750

■

Senate

1970s

1980s

1990s

2000s

FIGURE 9

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140

BEYOND SUSPICION

There has been a similar decline in the number of days in which
Congress has been in session, at least in the House. Again, averag-
ing the decades: 52

SESSION DAYS

340 -

305

270

Senate

235

House

1970s 1980s

1990s 2000s

FIGURE 10

Maybe fewer days "in session" is a good thing, if it gives mem-
bers more time in the district, and hence more time to understand
their constituents. But even the idea of "in session" doesn't fully
capture how the place has changed. As historian Gordon Wood
describes, in the First Congress, when Congress was "in session,"
"nearly all" members sat at their desk in the Hall of Congress, lis-
tened to debates for five hours a day, and were "usually attentive
to what their colleagues had to say on the floor of the House." 53
The "work" of a congressman was to deliberate — which means to
debate, and listen, and argue, and then decide.

The "work" of members even "in session" today has no connec-
tion to that picture. Maybe a handful of times in a two-year period
a majority of Congress will sit together in a single room listening

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What So Damn Much Money Does 141

to the debate about anything. The gathering of a majority of Con-
gress today is almost exclusively ceremonial. It is practically never
for the purpose the Framers envisioned: deliberation. Instead,
bells, like those from elementary school announcing recess, ring;
members race from wherever they are (which is most likely just off
the Hill, making fund-raising telephone calls) to the floor; they are
instructed by their staff as they enter the Chamber what the vote is
and how they are to vote. They vote, and then they leave. As politi-
cal scientist Steven Smith describes:

On only the rarest of occasions, such as the debate over the
1991 resolution on the Persian Gulf War, do senators engage in
extended, thoughtful exchanges before a full chamber. Instead,
under pressure to attend committee meetings, raise campaign
funds, meet with lobbyists and constituents, and travel home,
senators deliberately minimize the time they spend on the floor. 54

This change in the culture of Congress is radical when compared
with the Framing. It is also radical when compared with Congress
just thirty years ago. It has been criticized most by more-senior
members. Republican senator Trent Lott (R-Miss.; 1989-2007), for
example, describes Congress as having "had a different feel to it —
there was a respect for chain of command; there was a respect
for the institution." 55 In the words of Representative Tim Roemer
(D-Ind.; 1991-2003): members "spend too much of their time
dialing for dollars rather than sitting in their committee room and
protecting the dollars of their constituents." 56 Likewise with Repre-
sentative Pete DeFazio (D-Ore.; 1987- ): "You have to pretty much

neglect your job You're spending all this time on telephones,

talking mostly to people you don't know, you've never met." 57 And
again, Representative Lee Hamilton (D-Ind.; 1965-1999):

[T]he House has developed atrocious habits, [including] the
fact that members only spend two or three days a week in
Washington, [a] breakdown in the deliberative process that
guarantees that all legislation is carefully scrutinized, and all

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142

BEYOND SUSPICION

voices heard . . . the exclusion of the minority party, [and] fail-
ing to live up to its historic role of conducting oversight of the
Executive Branch. 58

He concludes, "[N]o one today could make a coherent argu-
ment that the Congress is the co-equal branch of government the
Founders intended it to be."

No doubt it's too much to tie all of these failings to the rise of
fund-raising. And no doubt, for some, anything that keeps Congress
from regulating more must be a good thing. But at the very mini-
mum, we can say with confidence that the fund-raising distracts
Congress from its work, and not surprisingly so. Any of us would be
distracted if we had to spend even just 30 percent of our time rais-
ing campaign funds. If you hired a lawyer to work for you, and you
saw that 30 percent of the time he billed you each month was actu-
ally time spent recruiting other clients, you'd be rightfully upset. If
you learned that teachers at a public elementary school that your

kids attended were spending 30 percent of their time running bake
sales to fund their salaries rather than teaching your kids how to
read, you'd be rightfully upset, too. So it doesn't seem crazy that we
should be rightfully upset that the representatives we elect to repre-
sent us spend even just 30 percent of their time raising funds to get
reelected rather than reading the bills they are passing, or attend-
ing committee meetings where those bills are discussed, or meet-
ing with constituents with problems getting help from the Veterans'
Administration. At the very minimum, the Fund-raising Congress is
flawed because the Fund-raising Congress is distracted. 59

Relative to the constitutional baseline, the work of the Fund-
raising Congress is distorted.

At the end of a powerful and creative analysis of the effect of lob-
bying on policy outcomes, Frank Baumgartner and his colleagues
present data that contrast the public's view of "the most important

2. Distortion

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What So Damn Much Money Does

143

problem facing the country today" with data "reflecting the con-
cerns of the Washington lobbying community." 60 The image is quite
striking (Figure 11).

Law, Crime, and
Family Policy

Macroeconomics
and Taxation

Health

Environment

International Affairs
and Foreign Aid

Transportation

Banking, Finance,
and Commerce

Science, Technology,
and Communication

Foreign Trade

Education

Social Welfare

5 10 15 20 25
Percentage of Issue Mentions

Lobbying

Public

FIGURE 11. Percent of lobbying cases compared to the
average responses to the Gallup poll question "What is
the most important problem facing the country today?" 61

This is a picture of "disconnect," as Baumgartner and his colleagues
describe it. It is a "consequence of who is represented in Washington."
"It may be," as the authors write, "that political systems built around
majoritarianism work better for lower-income citizens. It's certainly
the case that in the United States . . . inequities . . . are sharply exacer-
bated by the organizational bias of interest-group politics." 62

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144 BEYOND SUSPICION

The division between "majoritarianism" and "interest-group poli-
tics," however, might be too simple here. For even among democracies
driven by "interest-group politics" (as opposed to majoritarianism),
"disconnects" may be different. How much of that disconnect comes
from the way elections in Congress get funded? Would the disconnect
be less if the elections were funded differently? Would the distortion
be as clear?

The most effective way to gauge this distortion is with perhaps
the finest theoretical work in political science about lobbying in
Congress over the past decade, and a work that seems at first at
least to exonerate Congress of the cynic's charge.

In their 2006 paper, "Lobbying as Legislative Subsidy," Richard
Hall and Alan Deardorff provide a model to explain just what lob-
bying in Congress does. 63 Lobbying, they argue, is best understood
as a "legislative subsidy." Lobbyists don't try to flip their opponents.
They work instead to solidify and help their base. Most of the
work of lobbyists, they say, is directed toward getting people who
already agree (at least in principle) to better support what they
agree with. So lobbyists for unions, for example — and there are
some: 1.26 percent of the lobbying dollars spent in 2009 were from
labor spending 64 — don't waste their time trying to convert Mitch
McConnell (R-Ky; 1985- ) to the important role that unions have
in our economy. They instead spend their time with Representative
James Langevin (D-R.L; 2001- ), or Senator Richard Durbin (D-Ill.;
1997- ), helping them to better advance their views that labor
needs support. Lobbyists, in other words, try to subsidize the work
of the members of Congress whom they like, by helping them do
better the sort of stuff they already want to do.

This picture makes the process seem almost benign. If lobbyists
are just supporting members, how could they be corrupting them?
What's the harm? How could a free gift of aid consistent with what
a member already wants to do hurt anything or anyone?

The answer is, in at least three ways — two of which (and the
most important of which) Hall and Deardorff explicitly recognize,
and the third of which follows directly from their model.

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What So Damn Much Money Does 145

ft'rs?, and as Hall and Deardorff acknowledge, "representation [can
be] compromised without individual representatives being compro-
mised." 65 It may well be that lobbyists do nothing more than help a
member do what the member already wants to do. But not every issue
the member wants to support has the same "subsidy" behind it.

If, for example, a member went to Washington after campaign-
ing on two issues, the need to stop Internet "piracy" and the need
to help working mothers on welfare, on day one she'd find a line
of lobbyists around the block eager to help with the first issue, but
none there to help her with the second. That difference would be
for all the obvious reasons. And the consequence would be that her
work would get skewed relative to her desires going in. At the end
of two years, that member could well reflect that she supported only
the issues she said she would support. But if she were only slightly
more reflective, she'd recognize that the proportion of support she
gave her issues was driven not by her own judgment about the rela-
tive importance of each, but instead by the weight of the subsidy,
including, indirectly, of campaign funds.

Second, and related, the benign account underplays the way
such a system of "subsidy" may in the end block effective access to
representatives in government.

If there's one effect that money has that even supporters of the
current system concede, it is on access to government. 66 As Larry
Makinson puts it, "virtually everyone . . . accept [s] that money buys
access to members." 67 The reason is clear enough. As former sena-
tor Paul Simon (D-I1L; 1985-1997) describes it:

If I got to a Chicago hotel at midnight, when I was in the Sen-
ate, and there were 20 phone calls waiting for me, 19 of them
names I didn't recognize and the 20th someone I recognized as
a $1,000 donor to my campaign, that is the one person I would
call. You feel a sense of gratitude for their support. This is even
more true with the prevalence of much larger donations, even
if those donations go to party committees. Because few people
can afford to give over $20,000 or $25,000 to a party committee,

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146 BEYOND SUSPICION

those people who can will receive substantially better access to
elected federal leaders than people who can only afford smaller
contributions or can not afford to make any contributions. 68

Indeed, as Clawson and his colleagues argue, "the principal
aim of most corporate campaign contributions is to help corporate
executives gain 'access' to key members of Congress." 69 And that's
certainly its effect. As Representative Romano Mazzoli (D-Ky;
1971-1995) put it: "People who contribute get the ear of the mem-
ber and the ear of the staff. They have the access — and access is it.
Access is power." 70

Hall and Deardorff argue persuasively that if their theory of sub-
sidy is correct, then all access is doing is enabling like minds to
work together better — a "greater legislative effort on behalf of a
shared objective, not a disingenuous vote." 71

This description may be too sanguine. If the model of reciproc-
ity that I described in chapter 9 is correct, then there is a shared
interest among lobbyists, special interests, and members for the lob-
byists to become a practically exclusive channel through which leg-
islative change gets made (or blocked). We are nowhere close to this
exclusivity now, but we need to recognize why everyone involved
would like us to be. For the more the lobbyist becomes central, the
richer the lobbyist becomes. This benefits the lobbyist. And the
more the lobbyist becomes central, the easier it is for candidates to
secure funding. This benefits the candidates. And the more the lob-
byist becomes central, the easier it is for (some) special interests to
trigger legislative change. This benefits these (relatively dominant)
interests. For this exclusivity benefits not every special interest, but,
as Hall and Deardorff recognize, only the special interests that can

afford the high costs, not only of organizing and making cam-
paign contributions, but of paying professional lobbyists and
financing the organizations that support them. Such resources
are not equally distributed across groups. Business interests
exhibit "tremendous predominance" in federal lobbying

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What So Damn Much Money Does 147

Hence, the hypothesis set forth here, that public interest groups
without electoral assets can influence legislative behavior, does
not imply that they countervail the influence of private interest
groups and thereby correct the distortions. 72

Or, put more directly: "Lobbying distorts the representative's
allocation of effort in favor of groups sufficiently resource-rich that
they can finance an expensive lobbying operation." 73

I saw this dynamic firsthand. For many years, the focus of my
work was on issues relating to copyright and the Internet. Often
I would have the opportunity to speak directly to members of
Congress about these issues. The most striking feature of those
exchanges was not that members disagreed with me. It was that
members didn't understand that there was another side to the
issue. They had never even heard it. They were baffled when it was
described to them. To them, the world was divided into those who
believed in copyright and those who didn't. To meet someone who
believed in copyright but didn't think the Motion Picture Association
of America or the Recording Industry Association of America chan-
neled the word of God (that's me) was, to say the least, anathema.

This wasn't because these members were stupid. They weren't.
It wasn't because they were lazy. Most members of Congress work
much harder than the majority of people, if you count all the junk
they have to do, including fund-raising. Instead, this was simply
because this different side was nowhere on the radar screen of
these members. They hadn't heard it, because it hadn't had access.

Consider the lobbying that led to the recently enacted financial
"reform" bill. In October 2009 there were 1,537 lobbyists repre-
senting financial institutions registered in D.C., and lobbying to
affect this critical legislation — twenty-five times the number regis-
tered to support consumer groups, unions, and other proponents
of strong reform. 74 A system that makes lobbyists the ticket to influ-
ence is a system that wildly skews the issues that will get attention.
This, in time, will distort results.

Finally, the third reason this "legislative subsidy" model doesn't

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148 BEYOND SUSPICION

exonerate the current system is a dynamic that Hall and Deardorff
don't discuss but that is also consistent with their model. In describ-
ing the "lobbying as legislative subsidy," Hall and Deardorff write:
"The proximate objective of this strategy is not to change legisla-
tors' minds but to assist natural allies in achieving their own, coin-
cident objectives." 75

But what is this "nature" ? How is it begot? How nourished? When
a Republican member of Congress votes to raise the sugar tariff (as
35 Republican senators and 102 Republican members in the House
did with the 2008 Farm Bill), 76 is that because that member ran
on the platform that eight domestic sugar manufacturers should be
protected from the free market? Or when frontline Democrats —
meaning first-term members in closely fought districts, no more
liberal or conservative than more-senior Democrats — on the House
Committee on Financial Services voted to exempt car dealers from
consumer protection legislation, while senior Democrats on the
same committee did not, is that because those younger Democrats
ran on a platform that thought consumers needed to be protected
everywhere, except from used car dealers? 77

What's missing here is an understanding of how "nature" gets
made. For the relevant effect could be as much in anticipation as
in response. And if it were in anticipation, then the methods that
Ansolabehere and his colleagues deploy would not pick up the
change. The money would not be buying a change in preferences;
the change in preferences would be buying the money.

The best illustration of this dynamic is a comment by former
representative Leslie Byrne (D-Va.; 1993-1995), recounting what
she was told by a colleague when she first came to Washington: "I
remember the comment of a well-known, big money-raising state
delegate from Virginia. He said, 'Lean to the green,' and he wasn't
an environmentalist." 78

This is shape-shifting. It may well be unlikely that a lobby-
ist would waste his time trying to get a member to flip. There's
too much pride and self-respect in the system for that. There's too
much of an opportunity to be punished.

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What So Damn Much Money Does 149

But if a lobbyist is important, or influential over sources of cam-
paign contributions, then the effect of her influence could well be ex
ante: a member could take a position on a particular issue in anticipa-
tion of the need to secure that lobbyist's support. That decision isn't a
flip, for it isn't a change. It is simply articulating more completely the
views of a member, as that member grows into her job.

Now obviously this dynamic won't work for everything. Cer-
tain issues are too prominent, or too familiar. But for a vast range of
issues that Congress deals with, shape-shifting is perfectly feasible.
And that's because, for these issues, there's no visible change. As
Representative Vin Weber (R-Minn.; 1981-1993) puts it, a represen-
tative keeps "a mental checklist of things [members] need to do to
make sure their PAC contributors continue to support them." 79 Rep-
resentative Eric Fingerhut (D-Ohio; 1993-1994) makes the same
point: " [P]eople consciously or subconsciously tailor their views to
where they know the sources of campaign funding can be." 80

This dynamic is especially significant for smaller or more
obscure issues. As Vin Weber puts it: "If nobody else cares about it
very much, the special interest will get its way." 81

Likewise, Jeff Birnbaum: "It's the obscure and relatively minor
issues that produce the most frenetic lobbying. And it is there, on
the lucrative edges of legislation, that lobbyists work their ways.
Lobbyists constantly obtain special exceptions or extra giveaways
for their clients, and few other people ever notice." 82

Again, Eric Fingerhut: "The public will often look for the big exam-
ple; they want to find the grand-slam example of influence in these
interests. [R] arely will you find it. But you can find a million singles." 83

When the issue is genuinely uncertain, or just so obscure as not
to be noticed, this lobbying can induce shape-shifting — away from
the position the representative otherwise would have taken.

Such shape-shifting is perfectly consistent with Hall and Dear-
dorff 's model. Indeed, the conditions they identify where it does
make sense for a lobbyist to try to persuade turn out to be precisely
the sort of cases that Fingerhut, Birnbaum, and Weber are describ-
ing: obscure issues that a representative has no strong preference

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150 BEYOND SUSPICION

about, that are to be publicly voted upon, the results of which are
uncertain. 84 As Martin and Susan Tolchin quote former congress-
man and governor James Blanchard (D-Mich; 1983-1991), "In Con-
gress, people feel strongly about two or three issues On almost

all [other] issues, there's no moral high ground." 85

Shape-shifting is thus one reason the effect of money on legisla-
tive voting would be invisible. It is distinct from another dynamic
that would also be invisible to the regressions. The rankings of
members by groups such as the Chamber of Commerce is based
upon roll call votes. But roll call votes are the very end of a very,
very long legislative process. A bill gets introduced. It gets referred
to a committee. Very few of the bills referred to a committee get
a hearing. Even fewer get referred to the floor for a vote. On the
floor, there are any number of ways in which the proposal can be
stopped. Or folded into something else. Or allowed to die. There is
only one way to pass a bill in Congress, and a million ways to kill it.

But influence can be exercised — and hence a campaign contri-
bution rewarded — in any of the stages of the potential life of a bill.
If it is, it is invisible to the regressions. If a senator puts an anony-
mous hold on a bill, that doesn't enter any one ranking. If a chair-
man decides not to assign a hearing to the bill, he doesn't get tagged
as a result. In a whole host of ways, legislative power can be exer-
cised without a trace. And where it is exercised without a trace,
the regressions cannot map cause and effect. As the House Select
Committee on Lobbying Activities describes, "Complex government
inevitably means government with bottlenecks at which pressure
can be quietly and effectively applied The prevention of govern-
mental action, and this is the aim of many lobbies, is relatively easy
under these circumstances." 86 "Most issues," Baumgartner and his
colleagues find, "do not reach those final stages and most are not
highly publicized, even within the Beltway." 87 That means, again, the
opportunity for invisible influence is great. Senator Larry Pressler
(R-S.D. ; 1979-1997) describes a particular example, drawn from the
recent battle over health care:

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What So Damn Much Money Does 151

There should have been an up or down vote on [single-payer
health insurance] , or a vote at least on cloture. There was nei-
ther. For some reason, it just went away. Barack Obama aban-
doned it completely, although he had said he was for it. Some
Republicans are for it — I was for it way back and Nixon was
for it ... on a much more significant basis. Bob Packwood had a
plan for it. But the point is, when they really started doing the
health care bill, everybody disappeared who was for a single
payer system. I would suspect that is because of the insurance
companies' contributions, especially to the Democrats. 88

Pressler's example could be multiplied a million times over.
Indeed, it is almost too obvious to remark.

"You say," the skeptic insists, "that this competing dependency
upon money draws the members away from what they otherwise
would have done. But is there any evidence for this? Do we have a
way to calibrate the extent of this distortion, or even any measure
to demonstrate that there is distortion? "

There are two ways we might measure distortion. One maps
the gap between what "the People" believe about an issue and
what Congress does about that issue. Call this substantive distor-
tion. The other way maps the gap between what Congress actually
works on and what is important or, alternatively, what the people
want them to work on. Call this agenda distortion.

The evidence for substantive distortion is compelling, at the
level not of roll call votes — that's the fight we've just rehearsed —
but of actual policy decisions. This is the story of "regulatory
capture." 89 Consistent with the argument of this book, regula-
tory capture does not "imply that regulators are corrupt or lack
integrity." 90 And even without proof of a contribution-based distor-
tion, we know enough to conclude with very high confidence that
the distortion at the level of policy is real and significant. A wide
range of important work in political science makes it possible to
argue with confidence that, first, there is a wide gap in the policy

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152 BEYOND SUSPICION

preferences of "the funders" and "the People," and second, in the
face of that gap, Congress tracks not "the People" but "the funders."

The first work to make this point powerfully and clearly was
by Princeton professor Larry Bartels. In a study of the correla-
tion between U.S. Senate roll call votes and an index by Poole and
Rosenthal designed to measure the ideological position of members
across multiple dimensions, 91 Bartels concludes that "[i]n almost
every instance, senators appear to be considerably more respon-
sive to the opinions of affluent constituents than to the opinions of
middle-class constituents, while the opinions of constituents in the
bottom third of the income distribution have no apparent statisti-
cal effect on their senators' roll call votes." 92

Princeton professor Martin Gilens extended Bartels's analysis
substantially by examining about 1,781 national survey questions
between 1981 and 2002 93 These questions asked whether the
respondent supported or opposed some particular change in U.S.
policy, and then tracked whether in fact those changes occurred.
Looking at all the survey questions, Gilens was able to demonstrate
a significant difference between the likelihood that a measure
would be enacted if the rich supported it and the likelihood when
the middle class or poor supported it.

More striking was the comparison when looking at the subset
of questions where the highest income group differed substantially
in their views from the lowest (n = 887) and where the highest dif-
fered substantially in their views from the middle-income group
(n = 498). What Gilens found here was amazing: while policymak-
ers were responsive to the increasingly strong preferences of the
highest-income groups (the more of whom supported a policy, the
more likely it was to be passed), there was a "complete lack of gov-
ernment responsiveness to the preferences of the poor" 94 (mean-
ing increasing support among the poor for a particular policy did
not increase the likelihood of its passage). And middle-income vot-
ers "fare little better than the poor." 95

This rather stark conclusion is the whole subject of Jacob Hacker
and Paul Pierson's powerful book Winner-Take-All Politics (2010).

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What So Damn Much Money Does

153

Hacker and Pierson frame their account by distinguishing between
two kinds of societies, Broadland and Richistan. In Broadland, all
income groups across some period of time are doing better, even if
not necessarily at the same pace. In Richistan, only the very rich do
better across that same period of time. The rest of society is either
just holding on or falling behind.

Until about 1972 the United States, Hacker and Pierson argue,
was Broadland. We then became Richistan. And not just in some
slight or statistically meaningless sense, but instead, in as gross and
extreme a sense as any comparable nation in the world.

Indeed, the best comparison to where we are today is not any
other nation in the world, but rather to when we were on the cusp
of the Depression. In 2007 the richest 1 percent of families were
within a point of matching the share of income that the top 1 per-
cent had in 1928.

These numbers are hard to make real, but here's a way to visual-
ize them (Figure 12).

99%

raja-. ^E^>4^HBioaM^sZ.l^^^^^P

FIGURE 12

Between 2001 and 2006, the total income of all Americans
added together grew. But it didn't grow proportionately. Not even
close. For every dollar of added income, fifty-three cents of that
dollar went to the top 1 percent of American households. 96

It's even worse if you think about the top one-tenth of 1 percent

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154

BEYOND SUSPICION

FIGURE 13

(0.1 percent): for income gains between 1979 and 2005, the top 0.1
percent received over 20 percent of all gains, while the bottom 60
percent received only 13 5 percent (Figure 13) 97

In constant dollars, the average income of the top 0.1 percent
(including capital gains) in 2007 was more than $7 million. In 1974
it was about $1 million. Their share of the pie grew from 2.7 per-
cent to 12.3 percent — a four-and-a-half-times increase. 98

For the top one-tenth of one-tenth of 1 percent (0.01 percent),
it's even more extreme: the average after-tax income increased from
about $4 million in 1979 to more than $24 million in 2005. 99 In Hacker
and Pierson's terms, "Broadland was dead. Richistan was born." 100
Broadland is where most of the gains go to the bottom 90 percent of
households; and Richistan is where most of the gains go to the top
1 percent. Indeed, were it not for the increase in hours worked over
the past thirty years, the middle class would not have gained at all, and
the lower class would have fallen behind, while the highest-income
groups have exploded. 101 "The bottom went nowhere, the middle saw
a modest gain, and the top ran away with the grand prize." 102

Whenever anyone starts talking about inequality, the first reac-
tion of many (at least on the Right but also in the middle) is to turn off.
Our Constitution is not Soviet. We are not committed to the philoso-
phy of Karl Marx, or even John Rawls. That there are rich and poor in
America is a fact of American life. Some believe it explains the inno-
vation in American life. And no set of clever graphs demonstrating

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What So Damn Much Money Does 155

"how the rich get richer" is going to move those who believe that the
"unalienable right . . . [to] Life, Liberty, and the Pursuit of Happiness"
includes the right to get rich faster than your neighbor.

Likewise, there are important differences between the wealth of
the Gilded Age and the wealth today. The rich today are different. In
1929, as Rajan and Zingales put it, "70% of the income of the top .01%
of income earners in the United States came from holdings of capi-
tal .. . The rich were truly the idle rich. In 1998, wages and entrepre-
neurial income made up 80% of the income of the top .01%." 103 The
rich are not idle anymore. Indeed, they work harder than most of us:
"in the 1890s, the richest 10 percent of the population worked fewer
hours than the poorest 10 percent. Today, the reverse is true." 104

My point in introducing Hacker and Pierson is not to reinforce
the arguments of egalitarians, or the socialist Left. For the critical
insight that they add to this debate is not that inequality is growing.
It is instead the reasons that inequality is growing. Conservatives
might well and consistently believe that there's nothing wrong with
getting rich. But from the birth of conservative thought, conserva-
tives have always objected to people getting rich because of the gov-
ernment. It's one thing to invent the light bulb and thereby become a
billionaire (though, sadly, Edison wasn't so lucky). It's another thing
to use your financial power to capture political power, and then use
political power to change the laws to make you even richer.

So then what explains our move to Richistan? Is it geniuses pro-
ducing endless wealth? Or is it government regulation that is pro-
tecting endless wealth?

Hacker and Pierson work hard to suss this out. Maybe the rich
were better educated. Maybe that education produced this dif-
ference in rewards. But the rich in Hacker and Pierson's account
are not what most people would call rich. The rich are the super-
rich — the 0.1 percent or 0.01 percent. Those people are not better
educated than the top 1 percent. Indeed, as Gilens finds, "fewer
than one-third of Americans in the top income decile are also in the
top education decile, and vice versa." 105 If there's a reason that we
became Richistan, it 's not because of Harvard or Berkeley or MIT.

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156

BEYOND SUSPICION

It isn't raw smarts, or native talent. So, then what accounts for
our leaving the happy world of Broadland and becoming Richistan?

According to Hacker and Pierson, and astonishingly: changes
in government policy. A whole series of interventions by the gov-
ernment beginning in 1972 produced an enormously wealthy class
of beneficiaries of those changes. This is not the neighborhoods
of Desperate Housewives. Or even Hollywood or Silicon Valley. It
is instead a kind of wealth that is almost unimaginable to the vast
majority of Americans.

The biggest winners here are financial executives. As Nobel
Prize -winning economist Joseph Stiglitz writes, "Those who have
contributed great positive innovations to our society — from the pio-
neers of genetic understanding to the pioneers of the Information
Age — have received a pittance compared with those responsible
for the financial innovations that brought our global economy to
the brink of ruin." 106 In 2004, "nonfinancial executives of publicly
traded companies accounted for less than 6% of the top .01 percent

of the income bracket. In that same year, the top 25 hedge fund
managers combined appear to have earned more than all of the
CEOs from the entire S&P 500. 107

The next big winners were the top executives from the S&P 500
companies. In the 1970s the executives at the S&P 500 made thirty
times what their workers did, and today make three hundred times
what their workers make. 108 Their average salary was more than
$10 million in 2007, about 344 times the pay of "typical American
workers." 109 Likewise, as their salaries have skyrocketed, the posi-
tion of the self-employed has collapsed. Between 1948 and 2003
"the self-employment rate in the United States fell from 18.5% to
75%" 110 — the second-lowest among twenty-two rich nations accord-
ing to an OECD study. 111 The nation of our parents was defined
by makers and innovators. We've become a nation defined not
by the upwardly mobile entrepreneurs, but by Wall Street fat
cats — the nation predicted by the apostle Matthew (13:12): "For
whosoever hath, to him shall be given, and he shall have more
abundance." 112

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What So Damn Much Money Does 157

So let's repeat the point in a single line, because it is critical to
everything in this book: changes in government policy, Hacker and
Pierson argue, account for the radical change in the distribution of
American wealth. This isn't the rich getting richer because they're
smarter or working harder. It is the connected getting richer because
their lobbyists are working harder. No political philosophy — liberal,
libertarian, or conservative — should be okay with that.

To be fair, this last step in the argument — linking the rich to
the connected (by which I mean the funders) — is not a step that
Hacker and Pierson explicitly make. Indeed, and surprisingly, they
don't place campaign finance anywhere near the top of their pro-
gram of reform. And while Gilens clearly references it, he is quite
insistent that the work he has done so far cannot establish, at least
at the level of confidence that a political scientist requires, exactly
why policymakers respond to the rich more clearly than they
respond to the poor.

Yet as Gilens acknowledges,

[T]he most obvious source of influence over policy that distin-
guishes high-income Americans is money and the willingness

to donate to parties, candidates, and interest organizations

Since not only the propensity to donate but also the size of dona-
tions increases with income level, this figure understates —
probably to a very large degree — the extent to which political
donations come from the most affluent Americans. 113

Senator Bob Dole (R-Kans.; 1969-1996) puts the point more
directly: "Poor people don't make campaign contributions." 114

The question we must ask as citizens, not political scientists,
is what we will make of the data we've gotten so far. It is clear
that government bends in the direction that the funders prefer, and
against — often, but not always — the people. It is plausible, more
likely than not, that this differential bending is because of the influ-
ence of this funding. If you considered the matter in the way the
Framers did, accounting for the structural and predictable ways
in which dependency might express itself, it is almost irresistible,

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158 BEYOND SUSPICION

from their perspective, that Congress betray a competing depen-
dency "on the funders" — competing, that is, with a dependency "on
the People alone." The Framers were proud that they had ensured
a two-year cycle of punishment and reward for the House. Yet the
cycle of punishment and reward for funders is every day, not every
two years. For two or three or more hours every day, as a member
fund-raises, she feels the effect of the "votes" of funders. That feel-
ing must at least compete and, given the data, conflict with the
effect felt every two years in an election.

Indeed, it is here that the most striking weirdness of our current
system makes itself plain. Our Constitution has been interpreted to
require an almost obsessive attention to equality in voting. Judges
are required to ensure that the weight of my vote for my member
of Congress is "as nearly as practicable" equal to the weight of your
vote for your member of Congress. 115

That constitutional obsession ensures a kind of extreme equal-
ity on two days every two years — the primary (where there is one)
and the general election. On those two days, the weight of my
vote — the thing that was to ensure the dependency the Framers
intended — is equal to yours. Both equal, down to the fraction of a
percent equal.

Yet in between those two days, I, and thousands of others, also
"vote" in another kind of election: the money election. In that elec-
tion, I get to vote as often as I want, so long as my total "votes" to any
particular candidate don't exceed $5,000; and $117,000 for all can-
didates, PACs, and political parties in an election cycle. 116 The limits
don't apply to independent expenditures. So if I'm George Soros or
the Koch brothers, I can spend an unlimited amount in addition to
any amount I can contribute. And because of the Supreme Court's
decision in Citizens United v. FEC (2010), discussed more later,
corporations, too, have an unlimited right to spend as much as they
want promoting or opposing any candidate.

In this second election — the election for these dollar votes —
there is absolutely no concern about equality. For this competing
dependency that we have allowed to evolve within the economy

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What So Damn Much Money Does 159

of influence of Congress, there is no effort to ensure that the forces
within that economy are in any sense divided equally among citi-
zens. Instead, this competing dependency gives some in our soci-
ety an advantage over the rest in our society.

It is as if on Election Day, there were two ballots cast. In one
ballot, every citizen got one vote. In the other ballot, every citizen
got as many votes as he could buy — up to 4,800, with each vote
costing a dollar. Now, even if you gave the first ballot the presump-
tive control of the result — maybe you weight the two ballots, with
90 percent for the one-person, one-vote ballot, and only 10 percent
for the buy-as-many-votes-as-you-want-up-to-4,800 ballot — there
would still be something bizarre and illicit in this two-ballot proce-
dure. As journalist Jeffrey Birnbaum puts it, "Moneyed constituents
possess higher status than constituents who merely vote." 117 And
government policy is perfectly consistent with the effects that one
would predict, given the different influence this system permits. 118

This, you may recall, was precisely the way that Ansolabehere
and his colleagues — the scholars most skeptical about the effect
of money on politics — suggested that money may still be buying
results. Again, as I quoted them at the start of this chapter:

The evidence is pretty strong, at least for us citizens, that this is
precisely what is happening.

Gilens ends his powerful essay by noting, " [T] here has never been
a democratic society in which citizens' influence over government
policy was unrelated to their financial resources." True enough. The
troubling truth is in the final sentence to that paragraph: "But ... a
government that is democratic in form but is in practice only respon-
sive to its most affluent citizens is a democracy in name only." 120

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160 BEYOND SUSPICION

Again, we should be clear about the scope of Gilens's claim here:
He is speaking of cases where the views of the affluent conflict with
the views of the majority. In that context, this is our democracy.

Of course no one is saying members of Congress are completely
unresponsive to their constituents. That wasn't Gilens's point. It's
not mine either. Indeed, there are plenty of data to suggest that in
many cases there is a strong tie between what "the People" want
and what Congress does. So while Mian and his colleagues do find
that mortgage campaign contributions have a rising and significant
effect on voting patterns, they also demonstrate that members
were also responsive both to voter preferences and to special-
interest campaign contributions. 121 No doubt, if our republic was
meant to be dependent upon the people, there is much in the data
to show that we are still, in important ways, a republic dependent
upon the people. But not — and here is the critical point — upon, as
the Federalists put it, "the People alone."

The question, however, is not whether Congress sometimes gets
it right, any more than the question with an alcoholic bus driver is
whether he sometimes drives sober. The question is why we allow
Congress to often get it wrong. Even if you think the system is bent
just slightly, it is still a bent system.

"But," defenders of the status quo argue, "don't unions or the
AARP also have unequal influence? Is there something corrupt
about that?"

The answer depends on the source of the influence. No doubt,
there was a day when a union could reliably promise candidates
millions of votes. That power translated into important political
influence. But that is power that comes directly from votes. It is
precisely the power that the intended dependency of our democ-
racy, upon the people alone, was meant to credit. My point isn't
that democracy requires equal influence. It is that the influence
that is to express itself, however unequally, is the influence of votes
in an election.

The same point applies to political parties. Across our history,
political parties have had an enormous influence in controlling the

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What So Damn Much Money Does

161

direction and character of public life. That control has been a con-
cern to many, especially liberals. " The system' is robust," Harvard
professor Nancy Rosenblum has put it. "Candidates are dependent
on parties, even apart from funding." 122 As she quotes Lincoln Stef-
fens: "Isn't our corrupt government, after all, representative?'
Steffens asked. He records a Philadelphia politician's puzzled confes-
sion: 'I'm loyal to my ward and to my — own, and yet — Well, there's
something wrong with me, and I'd like to know: what is it? ' " 123

Parties, like unions, exercise their power in two ways. First, by
mobilizing votes. Second, by concentrating economic power. The
former is not troubling to the dependency theory of democracy.
Power through votes is just what the doctor ordered. It is the power
through money that raises the problem here. Avoiding "unequal
influence" is not the objective. Preserving electoral influence is.

"Isn't that," the defenders continue, "just what money does? No
one literally buys an election (anymore at least). The only thing
money does is buy speech that helps persuade voters to one side

in an election over another. If you don't object to unions driving
members to the polls (literally, on buses), why would you object
to spending money to try to persuade people to go to the polls
(through television ads)?"

Great point. There's no doubt that the purpose of campaign
funds is to persuade. And there's also no doubt that those funds
persuade differently. Some of that persuasion comes from the tele-
vision or radio ads a campaign is able to buy — getting a voter to
support the candidate. Some of that persuasion comes from the
ability to convince a challenger that a challenge is just not worth
it — "There's no way we could raise enough money to overcome his
war chest of one million dollars." All of that persuasion is benign
from the perspective of a democracy dependent upon the people
alone. Seen in this way, in other words, money is just part of a cam-
paign to get votes.

The word just in that sentence, however, shouldn't be passed
over too quickly. For one thing the current system plainly does is
filter out a wide range of people who might otherwise be plausible

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162 BEYOND SUSPICION

and powerful candidates for Congress. 124 Under the current sys-
tem, the ability to raise money is a necessary condition to getting
party support. As Hacker and Pierson report about the Democratic
Congressional Campaign Committee, "If a candidate proved a good
fund-raiser, the DCCC would provide support If not, the com-
mittee would shut him out." 125 The point was reportedly made
quite clear by Rahm Emanuel when he was chairman of the DCCC:
"The first third of your campaign is money, money, money. The sec-
ond third is money, money, and press. And the last third is votes,
press, and money." 126

The more important point, however, is not about what the
money does. It's about what has to be done to get the money. The
effect of the money might be (democratically) benign. But what is
done to secure that money is not necessarily benign.

To miss this point is to betray the Robin Hood fallacy: the fact
that the loot was distributed justly doesn't excuse the means taken
to secure it. Take an extreme case to make this critical point:
Imagine a lobbyist signaled to a congressman that he could ensure
$ 1 million in campaign funds so long as the congressman delivered
a $10 million earmark for the lobbyist's client. Even if the $1 mil-
lion is for the benign purpose of persuasion, there is an obvious
problem in the deal made to secure it. The distortion is in the deal,
not in the way the money is spent. The problem comes from the
distortion necessary to secure the deal, not from the effect of the
money spent in a campaign.

Of course, in this example the deal is a crime. And I've already
said I don't think such crime happens (much). But the same point
is true even if we substitute the more benign (as in legal) dance
of the gift economy I described in the previous chapter for the
quid pro quo game. Here again: If we assume the congressman
has shape-shifted himself in all sorts of predictable ways for the
purpose of ensuring funds for his campaign, even if that shape-
shifting dance is not illegal, and even though the money he secures
gets spent for the wholly positive purpose of persuading people in
an election, that doesn't acquit the shape-shifting. For, again, the

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163

problem is not the money; the problem is the distortion created
to produce the money. Senator Wyche Fowler (D-Ga. ; 1987-1993)
tells a related story that makes the same point:

The brutal fact that we all agonize over is that if you get two
calls and one is from a constituent who wants to complain
about the Veterans Administration mistreating her father, for
the 10th time, and one is from somebody who is going to give
you a party and raise $10,000, you call back the contributor.
And nobody likes that. There's no way to justify it. Except that
you rationalize that you have to have money or you can't cam-
paign. You're not in the game. 127

There's nothing wrong with the effect the $10,000 will have.
Nor is there anything wrong with the member calling back the
contributor. The wrong here — tiny in the scale of things but stand-
ing for the more general wrong — is the call not made.

Consider one final example. Birnbaum describes a congressman
in the mid-1980s who was undecided about whether to support
funding to build the B-l bomber. Reagan was "frantic for support"
for the bomber, so the congressman was a "hot commodity." A
deal was struck to get the congressman's vote. What was his price?
A dam or some special funding for road construction in the dis-
trict? No such luck (for his constituents). His price: "a VIP tour of
the White House for twenty or thirty of his largest and most loyal
campaign contributors." 128 Again, there's nothing wrong with the
White House giving VIP tours. But I suspect a constituent in this
congressman's district would be right to ask whether there wasn't
a better deal, for the district, that could have been made.

Once this distinction is made clear, the bigger point should be
obvious. We don't excuse a bank robber if he donates the money
he stole to an orphanage. Neither should we excuse a political
system that bends itself because of its dependency upon funders
just because it donates the proceeds it collects to funding political
speech. It is the bending, the distortion, the distraction, that is the

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164 BEYOND SUSPICION

problem, and all that is produced by this competing dependency
upon the f under s rather than the people.

That's substantive distortion. The argument supporting it is
long and complex. Length and complexity are certain to lose some
souls on the way.

The argument for agenda distortion, however, is much simpler.
Indeed, it can be made with a single case.

In the spring of 2011 the United States faced many public pol-
icy problems. We were in the middle of two wars. The economy
was still in the tank: thirteen million Americans were unemployed,
almost 15 percent were on food stamps, and 20 percent of kids
were living in poverty. There was an ongoing battle about health
care, and the public debt. There was a continuing fight over taxes.
Likewise over immigration policy. Many wanted tort reform. Legis-
lation to address global warming had still not been passed. Nor had
an appropriations bill, or a budget. And a fight between Tea Party
Republicans and the rest of Congress was bringing America to the
brink of a government shutdown.

So within that mix, what issue would you say was "the most
consuming issue in Washington — according to members of Con-
gress, Hill staffers, lobbyists and Treasury officials — " 129 at least as
reported by the Huffington Post's Ryan Grim and Zach Carter?

A bill to limit the amount banks could charge for the use of
debit cards: so-called "swipe fees."

This bill, addressing the question of "interchange rates," mean-
ing the amount banks can charge retailers for the use of a debit
card, was the leading issue for lobbyists. And therefore for Con-
gress, too. As Grim and Carter describe, "a full 118 ex-government

officials and aides [were] registered to lobby on behalf of banks

[A]t least 124 revolving-door lobbyists" were lobbying on behalf
of retailers. The issue dominated Congress's calendar. And beyond
it, "a handful of other intra-corporate contests consume most of
what remains on the Congressional calendar: a squabble over a
jet engine, industry tussling over health-care spoils and the never-
ending fight over the corporate tax code."

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What So Damn Much Money Does 165

We all recognize that "Congress is zombined." Nothing gets done.
Or at least, nothing relative to the issues that any objective measure
would say were the most important issues for the nation to resolve.
But "one of the least understood explanations," as Grim and Carter
explain, "is also one of the simplest: The city is too busy refereeing
disputes between major corporate interest groups." As Grim and
Carter quote one anonymous moderate Democratic senator:

I'm surprised at how much of our time is spent trying to divide
up the spoils between various economic interests. I had no
idea. I thought we'd be focused on civil liberties, on education

policy, energy policy and so on The fights down here can be

put in two or three categories: The big greedy bastards against
the big greedy bastards; the big greedy bastards against the lit-
tle greedy bastards; and some cases even the other little greedy
bastards against the other little greedy bastards.

Why, you might ask, is Congress held hostage like this? Why
can't it just focus on what it wants to focus on? I doubt there is a sin-
gle member of the House or Senate who thought, "I'm going to go to
Congress so I can divide up the spoils between various economic
interests.' " So why don't they simply do what they went to Congress
to do? ("Oh poor, poor me, I hate CBS." "So change channels!")

The answer is almost hidden in Grim and Carter's otherwise
brilliant essay. As they write, " [T]he clock never ticks down to zero
in Washington: one year's law is the next year's repeal target. Politi-
cians, showered with cash from card companies and giant retailers
alike, have been moving back and forth between camps, paid hand-
somely for their shifting allegiances."

Just to be sure you didn't miss the money point in this money
quote: Congress, Grim and Carter claim, sets its agenda, at least
in part, so as to induce funders to fund their campaigns. Who has
time to deal with jobs, or poverty, or unemployment, or a sim-
pler tax code? Where is the money in that? As Grim and Carter
write, "Political action committees organized by members of the

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166 BEYOND SUSPICION

Electronic Payments Coalition, a cadre of banking trade groups,
dumped more than $500,000 into campaign coffers during January
and February [2011] alone." 130

This dynamic is perfectly consistent with Hall and Deardorff.
There is plenty of persuading action on an issue not centrally
salient to the public. It also follows directly from the excellent and
extended analysis of Baumgartner and his colleagues of lobbying:
"The bad news is that the wealthy seem to set the agenda," and
"there's little overall correspondence between the congressional
agenda and the public's agenda," and because of this "many issues
never get raised in the first place." 131

It is perfectly inconsistent, however, with Chairman Smith's
claim that the money doesn't affect "legislative behavior." Setting
Congress's agenda is quintessentially "legislative behavior," and if it
isn't money that explains this particular mix, then it is pure insanity.

I chose the more charitable reading: It is money that is affect-
ing the agenda here. Money, in other words, that affects "legislative
behavior."

3. Trust

But let's say you still don't buy it. Let's say you still believe (and I'm
not going to hide it) astonishingly that the raising of the money
within this lobbyist industrial complex, has no systematically dis-
torting effect. That perhaps it distracts members of Congress, but
so what? The less Congress does, you think, the better. The politi-
cal scientists haven't proven that "money buys results," in your
view. And my gift economy argument just doesn't persuade you,
either.

Even if you assume that everything I've described is completely
benign — that the policy decisions that Congress enacted when
subject to the dependency upon funders as well as the dependency
upon the votes is precisely the same as the decisions it would make
if dependent upon the voters alone — there is still an undeniable
whopper of a fact that makes it impossible simply to ignore this

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What So Damn Much Money Does 167

competing dependency upon the funders: trust. 132 The vast major-
ity of Americans believe that it is money that is buying results.
Whether or not that's true, that is what we believe.

This belief has an effect. Or better, it has a series of effects.

Its first effect is to undermine trust in the system. According to
a 2010 Pew Research Center survey, "just 22% [of American voters]
say they can trust the government in Washington almost always or
most of the time, among the lowest measures in half a century." 133
Thirty years before, that number was 70 percent. 134 According to
the American National Election Studies project at the University of
Michigan, the public's perception of elected officials is near his-
toric lows. 135 Whereas in 1964, 64 percent of respondents believed
that government was run for the benefit of all and 29 percent
believed that government was run for the benefit of a few big inter-
ests, in 2008, only 29 percent believed government was run for the
benefit of all, and 69 percent believed it was run for the benefit of
a few big interests. Similarly, whereas in 1958 only 24 percent of
respondents believed that "quite a few" government officials were
"crooked," in 2008 that percentage had increased to 51 percent. 136
A poll commissioned by Common Cause, Change Congress, and
Public Campaign following the Citizens United decision found
that 74 percent of respondents agreed that special interests have
too much influence, and 79 percent agreed that members of Con-
gress are "controlled" by the groups and people who finance their
campaigns. 137 Only 18 percent believed that lawmakers listened to
voters more than to their donors. Similarly, in 2008, 80 percent of
Americans surveyed told the Program on International Policy Atti-
tudes that they believed government was controlled by "a few big
interests looking out for themselves." 138

Loss of trust induces a second effect. It leads any rational soul
to spend less time exercising her democratic privileges. 139 We're all
busy sorts. Some of us have families. Some hobbies. Some treat our
families as hobbies. But whatever the mix that drives our day, the
belief that money is buying results in Congress is a sufficient reason
for us to spend less time worrying about what Congress does — at

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168 BEYOND SUSPICION

least, that is, if we don't have money. What reason is there to rally
thousands of souls to the polls if, in the end, the polls can be dis-
tracted by the money? How would you explain it to your kid? (" Wil-
lem, I don't have time to play soccer, I've got to go waste my time
electing a member to Congress who won't have time to listen or
do what the voters want.") The politically engaged sorts are always
quick to spread scorn on the vast majority of Americans who don't
pay attention to politics. But maybe it's not they who deserve the
scorn. How ridiculous to waste time on elections when there are
soup kitchens, or churches, or schools that could use our volunteer
time? As Jeffrey Birnbaum puts it, "Rather than get mad and try to
change the system . . . most Americans have given up." 140

My claim about the relationship between trust and participation
might be challenged by some. A large empirical analysis done by
Steven J. Rosenstone and John Mark Hansen looking at survey data
concludes that distrust of government does not reduce voter turn-
out. 141 This conclusion has been relied upon by many to suggest
that levels of trust are independent of levels of participation. 142

The trust that I am speaking of, however, is more accurately
described as a view about efficacy: If one believes "money buys
results in Congress," one is likely to believe that participation will
be ineffective. And as Rosenstone and Hansen found, voters' feel-
ings of "political efficacy" and "government responsiveness" have
a large effect on voter participation. 143 Thomas Patterson has devel-
oped this view, arguing that "political efficacy" and confidence
in government are strongly linked. Looking at the 2000 election,
Patterson also found that distrust is linked to lower participation
rates. Moreover, "of all the reasons Americans give for their lack of
election interest, the most troubling is their belief that candidates
are not very worthy of respect: that they are beholden to their
financiers." 144

A recent example confirms this point. One of the groups most
affected by the explosion in cynicism is the group that was most
benefited by the romance with Obama: Rock the Vote!, a nonparti-
san nonprofit whose mission, according to Wikipedia, is to "engage

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What So Damn Much Money Does 169

and build the political power of young people." Founded in 1990, it
has developed a range of techniques and new technology designed
to register young voters, and turn them out "in every election." In
2008 the organization "ran the largest nonpartisan voter registra-
tion drive in history" — more than 2.25 million new voters regis-
tered, and there was a substantial increase in voter turnout among
the young. 145

But when Rock the Vote! polled its members about their plans
for the 2010 election, the single largest reason that young people
offered for why they did not plan to vote was "because no matter
who wins, corporate interests will still have too much power and
prevent real change." 146 That echoes the response that Representa-
tive Glenn Poshard (D-Ill.; 1989-1999) got when he asked a group
of students why they do not trust government: "Congressman, just
follow the money. You will know why we do not trust you." 147

The belief that money is buying results produces the result that
fewer and fewer of us engage. Why would one rationally waste
one's time? In the Soviet Union, the party line was that the party
was to serve the workers. The workers knew better. In America,
the party line is that Congress is to serve the people. But you and I
know better, too. And even if we don't actually know, our belief is
producing a world where the vast majority of us disengage. Or at
least the vast majority of you in the middle, the moderate core of
America, disengage. Leaving the henhouse guarded by us polarized
extremist foxes.

"But then maybe you should write a book trying to convince
America that money is not buying results," the defender objects. "I
mean, if Americans believed the earth was flat, that wouldn't be a
reason to ban airlines from flying across the horizon."

You can write that book. If you think you have the data to prove
that the existing system is benign — that it doesn't distort democ-
racy, that the idea that representatives would actually deliberate
is silly, that this competing dependency is a good thing, or at least
harmless — then make my day. Meanwhile, my view is that even
if America's judgment wouldn't pass peer review in a political

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170 BEYOND SUSPICION

science journal, it's pretty damn insightful. We should listen to it
and do something about it rather than sitting around waiting for
the political scientists to deliver their gold-standard proofs.

The problem is trust — or, is at the least trust. As Marc Hether-
ington put it, "part of the public's antipathy toward government is
born of concern that it is run for the benefit of special interests. . . .
Measures that can change this perception should increase politi-
cal trust." 148 We need to deploy those measures. But we can't until
we change what it is reasonable to believe — by removing the over-
whelming dependency of members upon special-interest funding.
As Dennis Thompson has written, "Citizens have a right to insist,
as the price of trust in a democracy, that officials not give reason to
doubt their trustworthiness." 149

"Officials" in this democracy have given us reason to doubt.

So let's survey the field of battle again. I began this chapter by
acknowledging two apparently conflicting Republican claims: On
the one hand, Senator Coburn claiming that there were "thousands
of instances . . . where appropriations are leveraged for fundraising
dollars." On the other, Chairman Smith claiming that "the money
does not play much of a role in what goes on in terms of legislative
voting patterns and legislative behavior."

There can be no doubt that the chairman is wrong at least about
"legislative behavior." Members spend between 30 percent and 70
percent of their time feeding this addiction. The majority of the
attention of Congress gets devoted to the questions that matter
most to their pushers (e.g., bank "swipe fees"). These two facts
alone demonstrate the extraordinarily important way in which the
money affects legislative behavior. No one could say that this effect
is benign.

The harder question is whether the money affects "legislative
voting patterns." Here, it is the testimony of another Republican,
Senator Larry Pressler (R-S.D.; 1979-1997), that is most helpful. As
he explained to me, whether or not the money matters in the very
last moment in the life (or death) of a bill, there is no evidence that

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What So Damn Much Money Does

111

it does not matter in the million steps from the birth of a policy
idea to the very last moments in the life (or death) of a bill. Instead,
all the "evidence" here is to the contrary: People who live inside
this system (e.g., former members) and people who study the life
of this system (e.g., journalists such as Kaiser) all affirm that money
is mattering here a very great deal. How could it not?

In the end, this debate is not really a disagreement among schol-
ars. It is a fight pressed by those defending a status quo. In that
fight, there is a Boris Yeltsin: an addict whose addiction is destroy-
ing his ability to do his job. That addict denies the addiction. But at
some point the denial feels like the dialogue from any number of
familiar works of fiction: "I can handle it." "It isn't affecting me or
my work." "I understand how it might affect others. But it doesn't
affect me." "I'm above it." "I can control it."

The corruption denier is in denial. It is time for us to move on.

Right.

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CHAPTER 11

How So Damn Much Money
Defeats the Left

n November 4, 2008, America voted to change its govern-

V — J merit. With the highest voter turnout in forty years, sixty-nine
million Americans elected the first African American president,
with twice as many electoral votes as his opponent, and almost
ten million more of the total votes cast. House Democrats gained
twenty-one seats, padding an already comfortable majority. And
with the defection of one Republican, Senate Democrats gained
enough seats to secure a filibuster-proof majority.

Obama's victory electrified the reform community. While no
political liberal, his campaign had promised substantial change.
Health care reformers were ecstatic to have a chance at real health
care reform. Global warming activists thought they had elected a
sexier version of Al Gore. And as Wall Street's collapse threw the
economy over the cliff, America was very eager to hear Obama, the
neo-Brandeisian, attack Wall Street. ("I will take on the corruption
in Washington and on Wall Street to make sure a crisis like this can
never, ever happen again"; 1 "We have to set up some rules of the
road, some regulations that work to keep the system solvent, and
prevent Wall Street from taking enormous risks with other people's
money, figuring that, 'Tails I win, heads you lose,' where they don't
have any risk on the downside." 2 ) If ever there was the opportunity
for progressive change, this election seemed to promise it.

I was a strong supporter of Obama. Indeed, long before you likely
had ever even heard the name Obama, I was a strong supporter of
Obama. He was a colleague of mine at the University of Chicago.
In 2000, Obama ran for Congress in the South Side of Chicago. The
campaign was awful, yet after his defeat, Obama was optimistic. "It

172

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173

was a good first try," he assured me. If that campaign was a good
first try, I thought, then he had even less political sense than I.

Despite that defeat, however, I backed every Obama campaign
since. In one sense, that's not surprising. We were friends. But
it was more than that. Like many who know the man, I believed
there was something more than the typical politician here. I was
convinced by Obama. More than convinced: totally won over. It
wasn't just that I agreed with his policies. Indeed, I didn't really
agree with a bunch of his policies — he's much more of a centrist on
many issues than I. It was instead because I believed that he had a
vision of what was wrong with our government, and a passion and
commitment to fix it.

That vision is the great orator's summary of the argument of
this book. In speech after speech, Obama described the problem
of Washington just as I have, though with a style that is much more
compelling. As he said, "the ways of Washington must change."

[I]f we do not change our politics — if we do not fundamentally
change the way Washington works — then the problems we've
been talking about for the last generation will be the same ones
that haunt us for generations to come. 3

But let me be clear — this isn't just about ending the failed poli-
cies of the Bush years; it's about ending the failed system in
Washington that produces those policies. For far too long,
through both Democratic and Republican administrations,
Washington has allowed Wall Street to use lobbyists and cam-
paign contributions to rig the system and get its way, no matter
what it costs ordinary Americans. 4

We are up against the belief that it's all right for lobbyists to
dominate our government — that they are just part of the sys-
tem in Washington. But we know that the undue influence of
lobbyists is part of the problem, and this election is our chance
to say that we're not going to let them stand in our way any-
more. 5

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174 BEYOND SUSPICION

[U]nless we're willing to challenge the broken system in Wash-
ington, and stop letting lobbyists use their clout to get their
way nothing else is going to change. 6

[T]he reason I'm running for President is to challenge that sys-
tem. 7

If we're not willing to take up that fight, then real change —
change that will make a lasting difference in the lives of ordi-
nary Americans — will keep getting blocked by the defenders of
the status quo. 8

It was this theme that distinguished Obama most clearly from
the heir apparent to the Democratic nomination, Hillary Clin-
ton. For Clinton was not running to "change the way Washington
works." She stood against John Edwards and Barack Obama in their
attack on the system and on lobbyists in particular. As she told an
audience at YearlyKos in August 2007: "A lot of those lobbyists,
whether you like it or not, represent real Americans. They repre-
sent nurses, they represent social workers, yes, they represent cor-
porations that employ a lot of people. I don't think, based on my 35
years of fighting for what I believe in, I don't think anybody seri-
ously believes I'm going to be influenced by a lobbyist." 9

The "anybody" here didn't include the thousand or so in the
audience, who moaned in disbelief as Clinton lectured them about
what they could "seriously believe."

Instead, Clinton's vision of the presidency was much like her
husband's (though, no doubt, without the pathetic scandals). She
saw the job of president to be to take a political system and do
as much with it as you can. It may be a lame horse. It may be an
intoxicated horse. But the job is not to fix the horse. The job is to
run the horse as fast as you can. Clinton had a raft of programs she
promised to push through Congress. Nowhere on that list was fun-
damental reform of how Washington worked.

I was therefore glad, not so much that Clinton had lost (she
is an amazing politician and, as her time as secretary of state has

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How So Damn Much Money Defeats the Left 175

confirmed, an extraordinary stateswoman), but that Obama had
won. For, as this book should make clear, it was my view, too, that
the critical problem for the next president was the corruption
we've been exploring here. Not because corruption is the most
important problem. But because corruption is the gateway prob-
lem: until we solve it, we won't solve any number of other critical
problems facing this nation.

I thought Obama got this. That's what he promised, again and
again. That was "the reason [he] was running for President [ — ]to
challenge that system." 10

Yet Obama hasn't played the game that he promised. Instead,
the game he has played has been exactly the game that Hillary Clin-
ton promised and that Bill Clinton executed: striking a bargain with
the most powerful lobbyists as a way to get a bill through — and
as it turns out, the people don't have the most powerful lobbyists.

As I watched this strategy unfold, I could not believe it. The
idealist in me certainly could not believe that Obama would run a
campaign grounded in "change" yet execute an administration that
changed nothing of the "way Washington works."

But the pragmatist in me also could not believe it. I could not
begin to understand how this administration thought that it would
take on the most important lobbying interests in America and win
without a strategy to change the power of those most important
lobbying interests. Nothing close to the reform that Obama prom-
ised is possible under the current system; so if that reform was
really what Obama sought, changing the system was an essential
first step.

The reason should have been obvious in 2009- In the very best of
times, the Clinton model of governing will only have (very) limited
success, so long as the current system of campaign funding remains
and so long as markets in America remain concentrated. Reform
shifts wealth away from some existing interest. That existing inter-
est will therefore have an interest in fighting the reform. Indeed, if
there were only one such entity with that interest, we could calcu-
late quite precisely how much they'd be willing to spend to avoid

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176 BEYOND SUSPICION

the reform: whatever the status quo was worth; they'd be willing
to spend up to (the net present value of) that amount to avoid any
change. 11 As Kenneth Crawford put it during the New Deal, "Their
bird is in the hand and they battle to keep it." 12

So, for example, imagine there were only one oil company in the
nation: if the net present value of being allowed to ignore the cost
of carbon in the products that oil company sold were $100 billion,
in principle, that oil company should be willing to spend $100 bil-
lion to avoid being forced to internalize the cost of carbon in the
products it sold. In a system where money can influence politics, it
is therefore not hard to understand why fundamental reform is not
possible.

The story gets more complicated if there is more than one entity
that benefits from the status quo. Then each faces what economists
call a "free-rider problem." It may be good for each that the status
quo is preserved, but it is better for each if the status quo can be
preserved without that interest having to pay to preserve it. Each,
in other words, would like to "free-ride" on the spending of the
others to preserve the status quo. The interests thus don't naturally
want to pay to avoid the reform. They instead need to coordinate to
ensure that each pays its way.

This makes the case for reform much more promising (for the
reformer at least) if markets are competitive. If there are a large
number of entities comprising a special interest, it is much less
likely that these entities could coordinate their fight to preserve the
status quo. Thus in a competitive market, reform is simpler than in
a concentrated, or monopolistic, market, if only because the targets
of that reform have a harder time defending against it.

The problem for us, however, is that major markets in Amer-
ica have become heavily concentrated, and on key issues it has
become much easier for allies to coordinate. Indeed, in the critical
markets for reform — finance, for example — firms are more concen-
trated today than ever before. That concentration makes coordina-
tion much simpler.

As Barry Lynn has described this concentration:

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How So Damn Much Money Defeats the Left 111

• Colgate-Palmolive and Procter & Gamble split more than
80 percent of the U.S. market for toothpaste;

• Almost every beer is manufactured or distributed by
either Anheuser-Busch InBev or MillerCoors;

• Campbell's controls more than 70 percent of the shelf
space devoted to canned soups;

• Nine of the top ten brands of bottled tap water in the
United States are sold by PepsiCo (Aquafina), Coca-Cola
(Dasani and Evian), or Nestle (Poland Spring, Arrowhead,
Deer Park, Ozarka, Zephyrhills, and Ice Mountain);

• Wal-Mart exercises a de facto complete monopoly in
many smaller cities, and it sells as much as half of all the
groceries in many big metropolitan markets. [It] delivers
at least 30 percent and sometimes more than 50 percent
of the entire U.S. consumption of products ranging from
soaps and detergents to compact discs and pet food;

• The world's supply of iron ore is controlled by three
firms (Vale, Rio Tinto, BHP Billiton);

• A few immense firms like Mexico's Cemex control the
world's supply of cement;

• Whirlpool's takeover of Maytag in 2006 gave it control
of 50 to 80 percent of U.S. sales of washing machines,
dryers, dishwashers and a very strong position in refrig-
erators;

• Nike imports up to 86 percent of certain shoe types
in the United States — for basketball, for instance — and
more than half of many others;

• As of March 2009, Google had captured 64 percent of all
online searches in the United States;

• TSMC and UMC have together captured 60 percent of the
world's demand for semiconductor foundry service — in
which a company serves as a sort of printing press for
chips that are designed and sold by other firms — and
have concentrated that business mainly in one industrial
city in Taiwan;

• Corning has captured a whopping 60 percent share of
the business of supplying [LCD glass] . 13

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178 BEYOND SUSPICION

These are just market concentration statistics. For antitrust pur-
poses, they don't necessarily translate into market power (though
they are certainly high), and it is market power that triggers the
special limits of antitrust law. So by pointing to these concentrated
markets, I'm not suggesting that the Antitrust Division of the Jus-
tice Department or the Federal Trade Commission is not doing its
work.

These concentrated markets do, however, translate into a
greater opportunity for coordinated political action: for the fewer
corporations there are with interests at stake, the fewer it takes to
persuade to support a campaign to defend those interests. Thus,
concentrated markets may not necessarily signal economic risk,
but they do raise the potential for political risk. 14

This insight has led even free-market proponents such as
Raghuram Rajan and Luigi Zingales to argue for a "political version
of antitrust law — one that prevents a firm from growing big enough
to have the clout in domestic politics to eventually suppress mar-
ket forces. " 15 We don't have that kind of antitrust today. Indeed, we
have practically no limits on the ability of the capitalists to pro-
tect themselves from either reform or capitalism. Antitrust law (as
interpreted in light of the First Amendment) exempts conspiracies
for the purpose of changing the law, even if the change is simply
to protect the conspirators. 16 Thus, no matter what reform a new
government might try, there is a well-funded and well-connected
gaggle of lobbyists on the other side. Those lobbyists know that
politicians will listen to their arguments quite intently, because
their arguments about good policy carry with them (through the
complicated dance that I described in chapter 9) campaign cash.
These lobbyists thus get to go to the front of the line. Their con-
cerns get met first, long before the concerns of the voter.

No example better captures this dynamic than the fight over
health care reform. The president made the reform of health care
a priority in the campaign. He made it a priority in his adminis-
tration. From his first days in office, Obama and his team strate-
gized on how they could get reform passed. And how they got that

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How So Damn Much Money Defeats the Left 179

reform passed shows plainly (if painfully) where the power in this
system lies.

Obama had made promises about health care in the campaign.
The "public option" was one such promise. Though the details
were never precisely set, the idea was simple enough: The govern-
ment would offer a competing health care plan that anyone would
have the freedom to buy. That option would thus put competitive
pressure on private insurance companies to keep prices low. It
may well have been that no one ever bought that public option
plan. That doesn't matter. The aim wasn't to nationalize health
insurance. The aim was to create competitive pressure to ensure
that the (highly concentrated) health insurance market didn't take
advantage of a national health care program to extort even greater
profits from the public.

Again, how was never specified. Sometimes Obama spoke of the
health care plan that members of Congress received. Sometimes he
spoke of a "new public plan." As the campaign website described:

The Obama-Biden plan will create a National Health Insur-
ance Exchange to help individuals purchase new affordable
health care options if they are uninsured or want new health
insurance. Through the Exchange, any American will have the
opportunity to enroll in the new public plan or an approved
private plan, and income-based sliding scale tax credits will be
provided for people and families who need it. 17

Likewise, at a speech at the University of Iowa on March 29,
2007: "Everyone will be able to buy into a new health insurance
plan that's similar to the one that every federal employee — from a
postal worker in Iowa to a congressman in Washington — currently
has for themselves."

Or again, three and a half months later, to the Planned Parent-
hood Action Fund on July 17, 2007: "We are going to set up a public
plan that all persons, and all women, can access if they don't have
health insurance."

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180 BEYOND SUSPICION

Or again, five months later, to the Iowa Heartland Presidential
Forum on December 1, 2007: "We will set up a government pro-
gram, as I've described, that everybody can buy into and you can't
be excluded because of a pre-existing condition."

And these promises continued after the campaign. During the
president's weekly address on July 17, 2009: "Any plan I sign must
include an insurance exchange: a one-stop shopping marketplace
where you can compare the benefits, cost and track records of a
variety of plans — including a public option to increase competi-
tion and keep insurance companies honest — and choose what's
best for your family." 18

But whether that plan or another, the idea that there would be
some backstop for all of us was a central plank in the campaign.

So, too, was doing something about the high cost of prescrip-
tion drugs. The pharmaceutical industry (PhRMA) is the third most
profitable industry in America. 19 One reason it is so profitable is
the monopoly the government gives it in the form of drug patents.
Those patents are necessary (so long as drug research is privately
financed), but there has long been a debate about whether they
get granted too easily, or whether "me-too" drugs get protection
unnecessarily. (A me-too drug is a new drug that performs very
similarly to a drug it is intended to replace. Patents for such drugs
may be unnecessary since the cost to society of a patent is large
[higher prices], and the added benefit from the me-too drug is
small.)

Patents, however, are not the only government-granted pro-
tection from an otherwise free market that the drug companies
receive. In addition to patents, the government sometimes prom-
ises not to use its market power to "force" drug companies to offer
lower prices to the government. I put that word in scare quotes,
because of course there's no coercion involved. Instead, it is just
the workings of an ordinary market, where large buyers pay less
than small buyers. Ordinary souls understand this to be the differ-
ence between wholesale and retail: The wholesaler pays less per
unit than retail prices. But when the wholesaler is really, really big,

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How So Damn Much Money Defeats the Left 181

that means it can leverage its power to get really, really good prices
from the seller.

Thus talk of "market power" and "forcing" shouldn't lead you
to think that anything bad is happening here. A seller is "forced"
to sell to wholesalers at lower prices in just the sense that you are
"forced" to pay $3-50 for a latte at Starbucks. If you don't like the
price, you can go someplace else. If the seller doesn't like the price
the wholesaler demands, the seller can just say no. People might
not like what the market demands. But most of us don't get a spe-
cial law passed by the government to exempt us from the market
just because we don't like what it demands.

The drug companies, however, did. In 2003, Congress passed
President Bush's biggest social legislation, the Medicare Prescrip-
tion Drug, Improvement, and Modernization Act. 20 This massive
government program — estimated to cost $549 billion between
2006 and 2015, 21 and not covered by any increase in taxes — was
intended to benefit seniors by ensuring them access to high-price
drugs. It also had the effect of benefiting the drug companies, how-
ever, by ensuring an almost endless pipeline of funds to pay for the
high-cost drugs that doctors prescribe to seniors.

The best part of Bush's plan (for the drug companies at least)
was a section called Part D, which essentially guarantees drug
companies retail prices for wholesale purchases. 22 The law bars
the government from negotiating for better prices from the drug
companies. Thus, while the government is not permitted to use
its market power to get lower prices from the drug companies, the
drug companies are permitted to use their (government-granted)
market power (from patents) to demand whatever price they want
from us.

This is not a simple issue. Sane and independent economists
will testify that it is very hard to determine exactly what price a
government should be able to get its drugs for. For just as there is
a problem with a monopoly (one seller), there is a problem with
monopsony (one buyer). Permitting a monopsonist to exercise all
of its market power can certainly cause social harm in just the way

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182 BEYOND SUSPICION

that permitting a monopolist to exercise all of its market power
can cause social harm.

My point, however, is not to map an economically ideal
compromise — even assuming there is one. It is instead to track the
president's position on these complicated policy questions. For
when Congress passed the Prescription Drug Act, there was no
ambiguity in Barack Obama's reaction. He was outraged. As he said
on the floor of the Senate, this was just another example of "the
power and the profits of the pharmaceutical industry . . . trump [ing]
good policy and the will of the American people." It was "a tre-
mendous boon for the drug companies." And as he added, "When
you look at the prices the Federal Government has negotiated for
our veterans and military men and women, it is clear that the gov-
ernment can — and should — use its leverage to lower prices for our
seniors as well. Drug negotiation is the smart thing to do and the
right thing to do." 23

Obama continued the criticism during his campaign. On the
Obama-Biden website, the campaign stated: "Barack Obama and
Joe Biden will repeal the ban on direct negotiation with drug com-
panies and use the resulting savings, which could be as high as
$30 billion, to further invest in improving health care coverage and
quality."

And the example was the subject of the campaign ad named
"Billy":

Narrator: "The pharmaceutical industry wrote into the pre-
scription drug plan that Medicare could not negotiate with
drug companies. And you know what, the chairman of the
committee, who pushed the law through, went to work for the
pharmaceutical industry making $2 million a year."

The screen fades to black to inform the viewer that "Barack
Obama is the only candidate who refuses Washington lobbyist
money," while the candidate continues his lecture:

"Imagine that. That's an example of the same old game play-
ing in Washington. You know, I don't want to learn how to play
the game better, I want to put an end to the game playing." 24

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How So Damn Much Money Defeats the Left 183

So just as clearly as the public was led to think that Obama's
reform would include a public option, the public was also led to
think that Obama's reform would never include another "tremen-
dous boon for the drug companies" in the form of a(nother) free
pass from the forces of the market.

On both fronts, of course, we were wrong.

As the story is told by Jonathan Conn of the New Republic,
Obama took on health care almost as "a test": "Could the country
still solve its most vexing problems? If he abandoned comprehen-
sive reform, he would be conceding that the United States was, on
some level, ungovernable." 25

But the question was on what terms America would be gov-
erned. As Cohn writes: "Obama had promised to change the
way Washington does business. No more negotiating in the ante-
rooms of Capitol Hill. No more crafting bills to please corporate
interests. But Obama also wanted to pass monumental legislation.
And it wasn't long before the tension between the two began to
emerge." 26

This statement is almost right, but not quite. Certainly Obama
had promised to end the practice of "crafting bills to please cor-
porate interests." ("[U]nless we're willing to challenge the broken
system in Washington, and stop letting lobbyists use their clout to
get their way, nothing else is going to change.") 27 But that's differ-
ent from promising to give up politics. ("No more negotiating in
the anterooms of Capitol Hill.") There's nothing wrong with nego-
tiating, and with compromise, so long as the driving force in that
compromise is the single dependency that this democracy is to
reveal: the people. Maybe voters in Nebraska need something from
California before they can support health care. There's no sin in
making that deal.

The sin, as Obama described it, and as I certainly believe it, is
when forces not reflecting the people force compromise into the
system. It is the ' undue influence of lobbyists" 28 — undue because
not tied to the proper metric for power within a democracy.

Yet the story that Cohn tells is the story of such "undue

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184 BEYOND SUSPICION

influence" again and again. The administration strikes a deal to
get PhRMA's support for the bill. The price? A promise to protect
PhRMA in just the way President Bush did with the Prescription
Drug Act: no bargaining to lower prices. That administration esti-
mated that a health care bill would increase the revenue to the drug
companies by $100 billion. This deal struck by Obama with the
lobbyists from PhRMA assured PhRMA that it would keep much of
that increase.

The same with the "public option." The Congressional Budget
Office had estimated that a public option would "save the govern-
ment around $150 billion," 29 by putting competitive pressure on
insurance companies to keep their rates low. That competitive
pressure seemed to many only fair, as insurance companies, like
PhRMA, were about to get a big boost from the bill: a require-
ment that everyone have insurance. But alas, as Cohn describes,
"That money would come out of the health care industry, which
prevailed upon ideologically sympathetic (and campaign-donation-
dependent) lawmakers to intervene. They blocked a bill until Wax-
man [dropped the public option]." 30

The lesson here is obvious. There are "institutional constraints"
on change in America. Central to those "constraints" is, as Cohn lists
it with others, "the nature of campaign finance." 31 And what is its
"nature"?: that "corporate interests" (Conn's words) "use lobbyists
and campaign contributions to rig the system and get [their] way, no
matter what it costs ordinary Americans" 32 (Obama's words). Here
that "nature" "cost ordinary Americans" up to $250 billion: appar-
ently the price we have to pay for reform to please these corporate
masters, given the "nature of campaign finance."

After health care passed, Washington Post columnist Ezra
Klein wrote with praise that Obama had "succeeded at neutraliz-
ing every single industry" 33 — insurance, PhRMA, the AMA, labor,
and even large businesses. Klein meant that term neutralizing pre-
cisely: that Obama had succeeded in balancing the forces of each
powerful interest against the other, with the result that his reform
(however hobbled it was) would pass.

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How So Damn Much Money Defeats the Left 185

That meaning for the term neutralizing was made ambiguous,
however, by the title that the editors gave to the essay ("Twilight of
the Interest Groups"), a title that suggested that Klein was arguing
that Obama had weakened the power of the interest groups. That
he had in fact, as promised, "fundamentally change [d] the way
Washington works." 34

Glenn Greenwald picked up on this hint, and as is his style,
picked on it in a merciless way. As he wrote,

If, by "neutralizing," Ezra means "bribing and accommodating
them to such an extreme degree that they ended up affirma-
tively supporting a bill that lavishes them with massive bene-
fits," then he's absolutely right.

Being able to force the Government to bribe and accom-
modate you is not a reflection of your powerlessness; quite the
opposite.

The way this bill has been shaped is the ultimate
expression — and bolstering — of how Washington has long
worked. One can find reasonable excuses for why it had to be
done that way, but one cannot reasonably deny that it was. 35

Greenwald's criticism of Klein is debatable. The criticism of
Obama, however, is completely fair. Had President Hillary Clinton
passed health care as Obama did, she would deserve great praise.
That Obama passed health care the way Clinton would have does
not earn him the same great praise. Rather than "take up the fight" to
"change the way Washington works," Obama has simply "bolstered"
"how Washington has long worked." That's not what he promised.

The story is very much the same with just about every other
area of major reform that Obama has tried to enact. Consider, for
example, the reform of the banks.

I've already described the reckless behavior of the banks —
encouraged as it was by idiotic government regulations — that
threw the economy over the cliff in 2008. Reckless from the per-
spective of society, not from the perspective of the banks. In my

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186 BEYOND SUSPICION

view, following Judge Richard Posner, the banks were behaving
perfectly rationally: if you know your losses are going to be cov-
ered by the government, gambling is a pretty good business model.

Reform here therefore needed to focus on the incentives to gam-
ble. The government needed to ensure that it no longer paid for the
banks to use other people's money to gamble with our economy.
After spending an enormous amount of public funds to save the
banks so as to save the financial system, we should at least ensure
that we don't have to save the system again.

From this perspective, the fundamental flaw in the system is
one that conservatives often harp upon in the context of welfare:
the system created a "moral hazard problem." With welfare, the
conservative's concern is that unemployment payments (intended
to cushion the burden of losing a job) may encourage people not
to seek a job. With the financial system, the conservative's concern
should be that the promise of a government bailout will encourage
the banks to behave more recklessly.

Indeed, the evidence of this moral hazard is quite compelling.
Banks in the United States have gotten huge in the past ten years.
They've gotten only bigger after the most recent crisis. 36 Before the
crisis, each bank could reasonably hope that if it got into trouble,
the government would help it. After the crisis, that hope is now a
certainty.

The market as it is means large banks are still able to gamble with
more confidence than small banks. It also means that these large
banks are therefore a less risky borrower than small banks (since
there's no risk they'll be allowed to go bankrupt), and can therefore
borrow money on the open market for a discount relative to small
banks. As Simon Johnson and James Kwak calculated the advantage
in 2009: "Large banks were able to borrow money at rates 0.78 per-
centage points more cheaply than smaller banks, up from an aver-
age of 0.29 percentage points from 2000 through 2007." 37

"In the period since" the crisis, as Oliver Hart and Luigi Zingales
summarize a study by economists Dean Baker and Travis McArthur:
"the spread had grown to 0.49 percentage points. This increased

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How So Damn Much Money Defeats the Left 187

spread is the market's estimate of the benefit of the implicit insur-
ance offered to large banks by the 'too big to fail' policy. For the
18 American banks with more than $100 billion each in assets,
this advantage corresponds to a roughly $34 billion total subsidy
per year." 38

A $34 billion subsidy per year: that's 500,000 elementary
school teachers, or 600,000 firefighters, or 4.4 million slots for kids
in Head Start programs, or coverage for 4 million veterans in VA
hospitals. 39 We don't spend that money on those worthy causes
in America. We instead effectively give that money to institutions
that continue to expose the economy to fundamental systemic risk
while paying the highest bonuses to their most senior employees
in American history.

As the system now works, when the banks' gambles blow up,
we bail them out. The bailouts, plus an endless stream of (almost)
zero-interest money (if one could call $9 trillion in loans from the
Federal Reserve a "stream"), gave the banks the breathing room
they needed to avoid bankruptcy, and the fuel they needed to earn
the massive profits to pay back the bailout, and also pay their senior
executives their bonuses. In 2009, investors and executives at the
thirty-eight largest Wall Street firms earned $140 billion, "the high-
est number on record." 40

This is a system of incentives crafted by government
regulation — both the regulation to permit the gambling and the
regulation to guarantee the losses. Together, it has created the
dumbest form of socialism known to man: As Paul Krugman has
described it, "socializ [ing] the losses while privatizing the gains," 41
benefiting the privileged while taxing all the rest. And we should
say, following Zingales, "[I]f you have a sector. . .where losses are
socialized but where gains are privatized, then you destroy the eco-
nomic and moral supremacy of capitalism." 42

Banks are rational actors. They would not expose our economy
to fundamental systemic risk if it didn't pay — them. And it wouldn't
pay them if they believed that they would go bankrupt when their
gambles blew up. So the single most important reform here should

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188 BEYOND SUSPICION

have been to end this "moral hazard problem" for banks. And the
one simple way to do that would have been to guarantee that banks
wouldn't be bailed out in the future.

The reform bill that passed Congress in 2010 tried to make that
guarantee. But that guarantee is not worth the PDF it is embedded
within. If any of the six largest banks in the United States today
faced bankruptcy, the cost that bankruptcy would impose on
America would clearly justify the government's intervening to save
it. In the face of that collapse, it would be irrational for the govern-
ment not to save it. "No matter how much we try to tie our hands,"
Zingales writes, "when a major crisis comes it is impossible to stop
the politicians from intervening." 43 Real reform cannot depend
upon irrational tough love. Real reform depends upon making it
make sense that the government lets the gamblers lose, so the gam-
blers know it makes sense for them to stop gambling.

The simplest way to achieve this real reform would be to force
banks back to a smaller size. 44 A promise by the government not to
bail out banks is credible only when banks are small. It is not cred-
ible when banks are "too big to fail." Thus, as Simon Johnson and
James Kwak recommend:

(1) A hard cap on the size of financial institutions: no financial
institution would be allowed to control or have an ownership
interest in assets worth more than a fixed percentage of U.S.
GDP. The percentage should be low enough that banks below
that threshold can be allowed to fail without entailing seri-
ous risk to the financial system. "As a first proposal, this limit
should be no more than 4 percent of GDP, or roughly $570 bil-
lion in assets today."

(2) A lower hard cap on size for banks that take greater risks,
including derivatives, off-balance-sheet positions, and other
factors that increase the damage a failing institution could
cause to other financial institutions. "As an initial guideline, an
investment bank (such as Goldman Sachs) should be effectively
limited in size to two percent of GDP, or roughly $285 billion
today." 45

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How So Damn Much Money Defeats the Left 189

This reform would have produced a market of banks that were
not so big that the government would have to save them. These
banks would therefore live life like any other entity in a competi-
tive market, keen to make money, but careful not to take on unnec-
essary or extreme risk. The market would thus be the ultimate and
efficient regulator, because the market would not forgive failure.
Bankruptcy would be the remedy for failure, not a blank check
from the Federal Reserve.

Yet the banks fought this obvious reform with fury, and suc-
ceeded. As Lowenstein describes it, "Wall Street institutions
emerged from the crisis more protected than ever." 46 "For better
or worse," as Tyler Cowen wrote after the reform bill was passed,
"we're handing out free options on recovery, and that encourages
banks to take more risk." 47 Hacker and Pierson quote "two New
York Times reporters describing Wall Street executives as 'pri-
vately relieved that the bill [did] not do more to fundamentally
change how the industry does business.' " 48 Sebastian Mallaby "put
[it most] simply": "government actions have decreased the cost of
risk for too-big-to-fail players; the result will be more risk taking.
The vicious cycle will go on until governments are bankrupt." 49

How was this non-reform reform bill passed?

Contributions by groups opposed to even the much tamer
reform bill that Congress passed were more than $25 million, two
and a half times the contributions of groups supporting the reform.
Likewise, lobbying in 2010 by interests opposed to reform was
more than $205 million. Lobbying by interests supporting reform:
about $5 million. 50 The result: The critical reform necessary to
secure our economy has not been made. Our banks were too big to
fail in the past. They have only gotten bigger, with even more cer-
tainty that they will not be permitted to fail in the future.

Former chairman of the SEC Arthur Levitt describes the
dynamic perfectly:

During my seven and a half years in Washington . . . nothing
astonished me more than witnessing the powerful special

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190 BEYOND SUSPICION

interest groups in full swing when they thought a proposed
rule or a piece of legislation might hurt them, giving nary a
thought to how the [battles over corporate reform] might help
the investing public. With laser-like precision, groups repre-
senting Wall Street firms . . . would quickly set about to defeat
even minor threats. Individual investors, with no organized
labor or trade association to represent their views in Washing-
ton, never knew what hit them. 51

In the words of perhaps the twentieth century's greatest phi-
losopher, David Byrne: "same as it ever was."

Finally, if the point isn't clear enough, consider one last exam-
ple: climate change regulation.

The 2008 campaign happened against the background of a pro-
found awakening of awareness about the dangers from climate
change. Al Gore was behind much of this new awareness — not
because any single soul slogging across the world giving thousands
of Keynote (not PowerPoint) talks about a problem is enough to
solve it, but when the power of those talks got amplified by the tal-
ent of a filmmaker such as Davis Guggenheim, that became a recipe
for a real change in awareness. The film won an Oscar. Gore won
a Nobel Peace Prize. Both political parties, and both candidates,
insisted that they were the candidate, and theirs was the party, to
fight global warming. Senator McCain had long maintained, con-
trary to many Republicans, that he believed global warming was
real, and something the government had to address. Senator Obama
could say the same, and made climate change legislation a central
plank of his campaign.

So when Obama won by a landslide, and with a majority in the
House and a supermajority in the Senate, environmental activists
were ecstatic: here, finally, was a chance to get something done
about arguably the most important public policy problem facing
the globe.

In the first two years of the Obama administration, environmen-
tal groups did whatever they could to support the administration's

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How So Damn Much Money Defeats the Left 191

efforts to get a bill. After they contributed close to $5.6 million in
the 2008 elections, and spent $22.4 million lobbying Congress in
2009 (compared with $35.6 million spent by opponents of reform
in the 2008 election, and $175 million spent lobbying Congress in
2009), 52 the House produced an extremely compromised "cap-and-
trade" bill. 53

Even that bill, however, couldn't survive the onslaught of
special-interest money. On July 22, 2010, Senate Majority Leader
Harry Reid announced that the cap-and-trade bill was dead. And
thus, no global warming legislation will now be passed during at
least the first term of Obama's administration.

In each case, the story is the same. The interests that would be
affected by the CHANGE that Obama promised lobbied and con-
tributed enough to block real change. Not completely, but substan-
tially. Seven billion dollars have been spent lobbying this Congress
during the first two years of the Obama administration, almost $ 1 bil-
lion more than was spent in the last two years of the Bush adminis-
tration. 54 That money blocks reform. It will always block reform, at
least so long as the essential element to effecting reform, Congress,
remains pathologically dependent upon the campaign cash that
those who block reform can deliver. As Al Gore has described it,
"The influence of special interests is now at an extremely unhealthy
level It's virtually impossible for participants in the current polit-
ical system to enact any significant change without first seeking and
gaining permission from the largest commercial interests who are
most affected by the proposed change." 55

Robert Reich makes the same point: "As a practical matter,
this means that in order to enact any piece of legislation that may
impose costs on the private sector, Congress and the administra-
tion must pay off enough industries and subsets of industries ... to
gain their support and therefore a fair shot at winning a majority." 56

The president gets this. He waged a campaign committed to
changing it. He promised us that changing it was "why [he was]
running." He challenged us to "take up the fight" 57 with him.

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BEYOND SUSPICION

Then the president surrounded himself with an army of tiny
minds whose vision of governance was Clinton's, not Obama's.
And in the tyranny of those tiny minds, the reform that Obama
promised died.

When critics like me attacked this retreat, the administration
defended itself by claiming the president was never a "leftist." But
the problem with this administration is not that it is too conserva-
tive. And certainly not that it is too liberal. The problem with this
administration is that it is too conventional. It has left untouched
the corruption that the president identified, which means that it
has left as hopeless any real reform for the Left.

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CHAPTER 12

How So Damn Much Money
Defeats the Right

he most important political movement in the second half of
the twentieth century began in 1964. A wildly popular Dem-

ocratic president, Lyndon Baines Johnson, was not going to be
defeated by any Republican. The Republican Party therefore let the
nomination go to the least likely Republican to win, Arizona's sena-
tor Barry Goldwater. Goldwater waged a campaign to mark out a
new political movement. His ideals resonated with just a few then.
But they were the seeds of a revolution for the Republican Party,
at least when properly cultivated by Ronald Reagan a decade later.

Reagan's first run for the presidency was also a defeat. On
November 20, 1975, he announced he would challenge a wildly
unpopular president of his own party, Gerald Ford. No one knows
for sure whether Reagan really thought he could win. But no one
expected that he would come so close to dislodging a sitting presi-
dent. In 1980 he was the logical pick for his party's nomination. He
easily defeated the unpopular incumbent, Jimmy Carter.

People forget how important ideas were to Ronald Reagan. By
the end of his term, his opponents had painted him as little more
than an actor on a very important stage. But I doubt we have had a
president in the past fifty years who more carefully and completely
thought through a philosophy for governing and government.
Reagan was more an academic than even the professor president,
Barack Obama. Whether you like his ideas or not, they were ideas.

If you doubt my claim, then just listen to the extraordinary col-
lection of radio lectures Reagan delivered between January 1975 and
October 1979- Said to have been written completely by him him-
self, scrawled on yellow legal pads in his office in Pacific Palisades,

193

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194 BEYOND SUSPICION

California, without the help of aides or clerks, these thousand-plus
three-minute shows mapped a series of arguments about the major
issues of the day. They were not cheap shots at current events. They
were not fluffy rhetoric masking empty ideas. They were instead
conclusive evidence of a president with a plan. Again, ideas.

At the core of these ideas was a suspicion of government. Again
and again, Reagan returned to the theme of a government gone
wild. His claim was not that bureaucracies were filled with evil
souls or idiots. The problem, instead, was good intentions gone bad.
And not because the bureaucrats didn't work hard enough (though
Reagan didn't often predicate "energy" of government employees).
It was instead because there was something inevitable about the
failure of big government. We needed a world where people relied
more on themselves, Reagan argued. A world where government
helped too much was a world where people did too little. Liberty,
like muscle, had to be exercised. The Nanny State would inevitably
weaken liberty, good intentions notwithstanding.

Lost liberty, however, wasn't Reagan's only concern. He worried
as well about an inevitable inertia within big government. Once
we let government get too large, Reagan feared, we would inevi-
tably lose control of a certain political, or public choice, dynamic.
As Reagan described, quoting (who he said was) Alexander Fraser
Tytler: "A democracy cannot exist as a permanent form of govern-
ment. It can only exist until the voters discover they can vote them-
selves largesse out of the public treasury. From that moment on the
majority always votes for the candidate promising the most ben-
efits from the treasury — with the result that democracy always col-
lapses over loose fiscal policy." 1

As a predication, I take it that most would agree with Reagan in
at least this respect: we have driven our government to the brink
of bankruptcy — and if Gary Becker and Richard Posner are cor-
rect, over the brink. 2 Total debt held by the public today is around
$9 trillion. That number will increase by between $1 trillion and
$2 trillion each year until 2020 at the earliest. If it does, then by

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How So Damn Much Money Defeats the Right 195

2020, half of federal tax revenue will go simply to servicing the
debt. 3 (Fiscal) prudence is not our middle name.

Yet however strongly we can agree with where things went,
with all due respect to the most important political figure in my
lifetime, we should push a bit more to understand just why things
went where they went. Reagan spoke as if the engine driving our
inevitable destruction were the rapaciousness of the masses and
the bureaucrats — the masses, as they "vote themselves largesse out
of the public treasury"; the bureaucrats, as they relentlessly pushed
to regulate an ever greater scope of human activity.

When you look to the causes of the massive explosion in govern-
ment debt, however, it's hard to see "the masses" as responsible for
much of anything. Instead, the overwhelming dynamic in income
in America over the past two decades has been rising inequal-
ity, which "government taxes and benefits have actually exacer-
bated [ — ]an outcome witnessed in virtually no other nation." 4 Sure,
the Medicare Prescription Drug, Improvement, and Moderniza-
tion Act was designed to help the middle class. But Part D was a
$49.3 billion gift to big PhRMA. 5 Sure, health care reform will help
millions of uninsured, but it was also a $250 billion gift to PhRMA
and the insurance industry. 6 Sure, Obama pledged $700 billion to
save Wall Street and another $800 billion to stimulate the economy.
But it was the banks that received the vast majority of that bailout
(and more important, the $9 trillion of effectively zero-interest
loans from the Fed). Fewer than $75 billion was ever intended to
go to homeowners, and in the end, less than $4 billion actually did. 7

The engine behind this spending, or at least the most horse-
power, came not from the masses, but from the special interests.
And these interests could leverage their power to achieve this rapa-
ciousness because — in part at least — of the "self-reinforcing cycle
of mutual financial dependency" between members of Congress
and the lobbyists, as the American Bar Association's Lobbying Task
Force put it. 8

Reagan couldn't see this in the early 1970s when his philosophy

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196 BEYOND SUSPICION

was finally set. The dynamic hadn't quite taken hold. No doubt
there was "rent seeking" — efforts by special interests to secure
favors through the government that they couldn't get through the
free market. But then, the level of this rent seeking was nothing
close to the level that is now the new normal. It's not the game that
has changed. It is the scale. Reagan can be forgiven for missing this
scale.

Likewise with the alleged rapaciousness of bureaucrats. It's easy
to see how Reagan's fear was engendered. In the early 1970s, Nixon,
a Republican, had established the Environmental Protection Agency
(EPA), the Occupational Safety and Health Administration (OSHA),
the Consumer Product Safety Commission (CPSC), and the Mining
Enforcement and Safety Administration (MESA), and had expanded
the Office of Management and Budget (OMB). As these regulators
got going, there was a wide range of new stuff regulated. That flurry
of activity could easily have seemed like a trend. As if the agencies
would take off, regulating untethered to the mother ship.

But agencies regulate only so far as Congress allows. And as it
turns out, the reasons that Congress might have for allowing the
scope of regulation to grow are more than a simple pro-regulatory
bias.

We'll see this point more in the pages that follow. But for now,
imagine a follower of Ronald Reagan who wants to achieve three
core Reagan objectives. First, he wants to shrink the size of govern-
ment. Second, he wants to simplify the U.S. tax system. Third, he
wants to make sure that markets are allowed to be efficient.

What are the systemic challenges this Reaganite would face
within the current economy of influence that is D.C.? What would
block him, and his (Tea) Party, from their ends?

1. Making Government Small

When Al Gore was vice president, his policy team had a proposal
to deregulate the Internet. As a "network of networks," the Internet
lives atop other physical networks. In 1994 some of those networks

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How So Damn Much Money Defeats the Right 197

were telephone networks; some were (promised to be) cable net-
works. The bits running on the telephone lines (both the dial-up
connections and DSL) were governed by Title II of the Communica-
tions Act of 1934. The bits running on cable lines were regulated
by Title VI.

Title II and Title VI are very different regulatory regimes. One
has an extensive regulatory infrastructure (Title II); the other has a
very light (with respect to access at least) regulatory infrastructure
(Title VI). So Gore's idea was to put both kinds of Internet access
under the same regulatory title, Title VII, and to give that title the
smallest regulatory footprint it could have. Not no regulation, but
much less regulation than is contemplated today by "network neu-
trality" advocates.

Gore's team took the idea to Capitol Hill. One aide to Gore sum-
marized to me the reaction they got, "Hell no! If we deregulate
these guys, how are we going to raise any money from them? "

As I said, Reagan often spoke as if it were the bureaucrats who
were pushing to increase the size of government. These bureau-
crats, like roaches, would push and push and push until they regu-
lated absolutely everything they could.

What Reagan didn't think about is how members of Congress —
even Reagan Republicans — might themselves become the roaches.
How they both, Republicans and Democrats alike, have an interest
in extending the reach of regulation, because increasing the range
of interests regulated increases the number who have an interest
in trying to influence federal regulation. And how is that influence
exercised? Through the gift economy enabled by Santa, the lob-
byist.

Now, of course no one would say that Congress regulates sim-
ply for the purpose of creating fund-raising targets — though that
was the clear implication of Ryan Grim and Zach Carter's story
about the perennial battles among potentially large funders that
get waged in Congress. 9 But souls on the Right — especially those
enamored of incentive theories of human behavior — should rec-
ognize that it is more likely Congress's thinking about targets of

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198 BEYOND SUSPICION

fund-raising that affects the scope of government power rather
than bureaucrats angling to increase the scope of their work. That
having lots of targets of regulation is actually a good way to have
lots of targets for fund-raising. And thus, so long as fund-raising
is a central obligation of members of Congress, there is a conflict
between the interests of small government activists and the inter-
ests of the fund-raising-dependent congressmen.

This point is even clearer when you think about it from the
perspective of the targets of this fund-raising. According to one
survey, almost 60 percent of the time when members of Congress
meet with regulators and other government officials, "they do so
to help their friends and hurt their political opponents." 10 That fact
produces "fear," this study concludes, in the minds of business
leaders. That "fear . . . drives most business leaders to contribute to
campaigns. It's also why most say donors get more than their mon-
ey's worth back for their political 'investments.' " n

Martin Schram asked former members about that fear. As he
describes it,

I asked, "just what do you suppose the lobbyist is thinking when
he or she gets a telephone call in which a senator or representa-
tive who sits on a committee that oversees the lobbyist's special
interest is asking for a large contribution." [WJhen pressed...
the Members pondered it, and then often voiced the same basic,
obvious conclusion: "The lobbyist must figure that he or she has
no choice but to contribute — or risk being shut out." 12

This dynamic is common. One Joyce Foundation study found
that "four fifths of [individual donors] said that office holders reg-
ularly pressured them for contributions." 13 Almost 84 percent of
corporations reported that candidates pressured them for contri-
butions at least occasionally; 18.8 percent said this happened fre-
quently. 14 Even the reformers reportedly practice this extortion.
As Clawson describes, one "PAC officer reported that though John
Kerry (D-Mass.; 1985- ) makes a public issue of not accepting PAC

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How So Damn Much Money Defeats the Right 199

contributions, his staff had nonetheless called the corporation to
say that Kerry expected $5,000 in personal contributions from the
company's executives." 15

"The longer I stay in Washington," reporter Jeff Birnbaum
writes, "the more I believe the protection-money racket is a good
metaphor for what a lot of campaign giving is about." 16 A protection
racket, or a gift economy — you pick, but each of which depends
upon the other side's having something to give. And the key for
reformers on the Right to see is that the more the government's
fingers are in your business, the more the politicians have to "give."
"Donors coerce politicians," as Clawson puts it, "and politicians
coerce donors." 17

The same dynamic explains the organization of Congress. Newt
Gingrich "believed that the more committees and subcommit-
tees a person can be on, the more attractions they can acquire to
present to contributors." 18 Of course, as I've already reported, the
attendance at hearings of those committees has also fallen off dra-
matically. But that's consistent with an account of the growth of
committees that looks more to the influence of committee member-
ship on potential funders than to the importance of the actual work
of the committees. As Martin Schram reported after interviewing
former members of Congress, "lawmakers freely acknowledged that
they and their colleagues often sought assignments to certain 'cash
cow' committees primarily because members of those commit-
tees are able to raise large amounts of campaign money with little
effort." 19 Here is the purest example of regulating to raise money,
open and notorious in the current context of Congress.

The lesson is simple: Getting a smaller government is difficult
enough. Getting a smaller government when members have a
direct financial interest in a bigger one might well be impossible.

2. Simple Taxes

It has been a central plank of the Republican Party since before
Ronald Reagan that our system taxes too much, and too complexly.

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200 BEYOND SUSPICION

Simpler, "lower taxes" has been the common and consistent
refrain. Of course, sometimes that refrain has been translated into
lower taxes, at least for some. But the aspirations of many on the
Right (and sometimes even on the Left, such as Jerry Brown in the
1992 presidential election) that we move to a flat tax, so simple it
could be completed on a postcard, have not been realized.

Why? Who benefits from complex taxes? And how could that
benefit possibly outweigh a universal push for simplicity?

To understand the nature of tax law in America, you have to
understand one simple point: its complexity is a feature, not a bug.
From the perspective of those closest to crafting the code, com-
plexity offers a host of opportunities that simplicity simply can't.
Some of those opportunities are legitimate: the chance to better
target taxing to achieve economic goals. But many are completely
illegitimate. And for the illegitimate, when simplicity is pushed,
complexity pushes back harder.

The most obvious, if most trivial, example of this is the very
system for collecting taxes. In 2005 the State of California started
experimenting with a system they called "ReadyReturn." The
ReadyReturn system treated taxes the way Visa treats your credit
card bill. Rather than demanding that you fill out a form listing all
the times you used your Visa over the prior month, and then send-
ing a check to Visa for the total, Visa sends you a bill that lists all
the charges you made, and the amount Visa thinks you owe it. Of
course you're free to challenge any charge on the bill. Credit card
companies are pretty good about removing them. But obviously,
given that Visa knows every charge you've made, it makes more
sense for them to fill out your bill than for you.

Advocates for the ReadyReturn asked, Why aren't taxes the same?
For the vast majority of taxpayers, the government, like Visa, knows
exactly how much the taxpayer owes. Wages are reported to the gov-
ernment by employers. Interest and dividend payments are reported
by banks. For most Americans, that's all there is to the annual tax
ritual. So why not a system that sent the taxpayer a draft tax form

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How So Damn Much Money Defeats the Right 201

that was already rilled out? As with the Visa statement, the taxpayer
would be free to challenge it. But for the vast majority of taxpayers,
no change would ever be needed.

Not necessarily a postcard, but just as simple.

In 2005, following a plan sketched by Stanford Law professor
Joe Bankman, California implemented an experimental system
like this for taxpayers with just one employer and no complicated
deductions. The reviews were raves. As one report put it: "Most
of the taxpayers who voluntarily participated in a test run of the
state's Ready Return program said it alleviated anxiety, saved time
and was something government ought to do routinely. More than
96% said they would participate again." 20

So the following year, the state taxing authorities decided to
expand the experiment. But very quickly, they hit a wall. Strong
legislative opposition was growing to oppose this effort at tax sim-
plification.

Why? From whom? Well, not surprisingly, from those who ben-
efit most from a world where taxes are complex: consumer tax
software makers, who sell programs to consumers to make com-
pleting complex taxes easier. 21 Leaders in the California legislature
blocked a broad-based rollout of this immensely popular improve-
ment in the efficiency of the California tax system because it would
hurt the profits of businesses who sold software to make Califor-
nia's existing and inefficient tax system more efficient.

Now, again, this is small potatoes. And it has nothing directly
to do with Congress (though a similar program at the federal level
has been stalled at the IRS for similar reasons). But it illustrates the
discipline we need to adopt if we're to understand why obvious
problems don't get fixed. Sometimes problems pay. When they pay
enough, those who benefit will work to block their being fixed.

This lesson we've seen before. But the more invidious story
about complex taxes is actually quite a bit different, and much
more significant.

The taxes that most of us think about are quite general. Most

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202 BEYOND SUSPICION

pay the same sales tax. And while the rates for income taxes are
different depending upon your income, the impression the system
gives is that broad classes of taxpayers pay the same basic rates.
The tax code, to the uninformed, is a set of rules. Rules are meant
to apply generally.

In fact, our tax code is riddled with the most absurd exceptions.
Special rates that apply to "all corporations incorporated on Janu-
ary 12, 1953, in Plymouth, Massachusetts, with a principal place
of business in Plymouth, employing at least 300 employees as of
2006" — that is, a case where "all" means "one." Special exceptions
to depreciation rules, or to deduction limitations.

These exceptions are proposed and secured by lobbyists.
Indeed, lobbyist firms specialize in providing the "service" of
securing these special benefits. The firm Williams and Jensen, for
example, advertises that it has "the primary mission of advancing
the tax policy interests of clients" and claims to have a "results-
oriented approach, proven by outcomes," including "creating new
tax code provisions to help finance a client's project" by "securing
special effective dates and exemptions when Congress adopts tax
law changes." 22 A paper by Brian Richter and his colleagues demon-
strates convincingly one clear example of such a special tax ben-
efit that gave one (and only one) NASCAR facility accelerated tax
depreciation for their racetrack. The company secured that benefit
through about $400,000 in fees paid to the lobbyist firm. 23 Richter's
paper then provides an incredible empirical analysis of lobbying
disclosure data to show that "firms that lobby are able to accelerate
their tax depreciation at faster rates than firms that do not lobby." 24

In light of this finding, it is not "surprising that [corporations]
spend . . . money on lobbying since it has a quantifiable payoff in at
least one important area, taxes." 25 "For firms spending an average
of $779,945 on lobbying a year, an increase of 1 percent in lobbying
expenditures produced a tax benefit of between $4.8 million to
$16 million." 26 That's a 600 percent to 2,000 percent return— not
bad for government work!

This, too, is something we've seen before. Yet it is just one-half

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How So Damn Much Money Defeats the Right 203

of the two-part dance that, unless stopped, will drive our taxing
system into bankruptcy.

The key to the dance is this: When you get a targeted tax benefit,
you don't get to keep it forever. Instead, because of the rules gov-
erning how our budget gets drafted (so-called "PAYGO rules"), 27
each of these special benefits "sunsets" after a limited period.
Because of these sunsets, each must be reconsidered every time a
budget gets drafted.

Sunsets sound like a good idea. Indeed, some seem to treat them
as a panacea for all the ills of a government. But when you begin
to think more carefully about the obvious incentives, or politi-
cal economy, that sunsetting creates, their virtue becomes a bit
more ambiguous. For every time a "targeted tax benefit" is about
to expire, those who receive this benefit have an extraordinarily
strong incentive to fight to keep it. Indeed, we can say precisely
how much they should be willing to pay to keep it. If the tax ben-
efit is worth $10 million to the company, they should be willing to
spend up to $10 million to keep it.

Professor Rebecca Kysar has framed the point most effectively
in the context of "tax extenders" — the term used for temporary
tax provisions. In a paper published in 2006 in the Georgia Law
Review, she described the obvious (though apparently missed by
those who created these sunsets) incentives a system of sunsets
produces. As she wrote, "The continual termination of certain tax
benefits and burdens creates occasions for politicians to more eas-
ily extract votes and campaign contributions from parties affected
by the threatened provision." 28

They do this by "increas [ing] the amount of rent available for
extortion." 29 (Remember, "rent" refers to the surplus produced
by government regulation, which different interests fight over —
with the interest at issue here including the politician.) Increasing
"extortion'-inducing "rents" produces only one thing: more extor-
tion!

That wasn't exactly the purpose of these sunsets, either when
pressed generally (as they were, most importantly, by President

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204 BEYOND SUSPICION

Carter) or specifically in the context of taxes. Indeed, the first tax
extenders were created as a genuine compromise to test whether
a controversial predication about tax revenue was true. In 1981,
Congress enacted Reagan's idea of a credit for research and devel-
opment. Some on the Left doubted the credit would produce the
revenue the Reaganites predicted. As a compromise, the credit was
made temporary, so that the actual effect could be measured. 30

Harmless enough — as were other original sunsets for tax provi-
sions, all either experiments or addressing a temporary problem
(such as the benefits granted to employees working in or near the
World Trade Center affected by the attack on 9/H)- 31 But if the road
to hell is paved with good intentions, then the paving here has cer-
tainly worked. For the numbers should give us a clue as to why
these intended sunsets were never actually going to happen. In
the first twenty-five years of the life of tax sunsets, only two were
allowed to expire — and one of those was renewed in the next ses-
sion of Congress, with a retroactive gift given to cover the lapse. 32

The lie to this game becomes clear, Kysar argues, when you
look again at the very first "tax extender." For, whatever skepticism
there was at the beginning, most economists agree that this Rea-
gan idea was a brilliant one. The tax credit really did produce more
growth and revenues than it cost. It was perfectly tuned to induce
growth and investment — precisely the purpose any such benefit
would have.

So once that point had been proven, why didn't Congress just
make it permanent? We had run the experiment. The data showed
that the benefit made good economic sense. Why go through the
game of renewing a good idea every two years?

The answer, Kysar suggests, has lots to do with the nature of
the beneficiaries. "The principal recipients of the research credit,"
Kysar writes, "are large U.S. manufacturing corporations." In many
cases, the credit "cuts millions of dollars from the tax returns of
a single corporation." So, obviously "[t]hese business entities are
more than willing to invest in lobbying activities and campaign
donations to ensure the continuance of this large tax savings." 33

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How So Damn Much Money Defeats the Right 205

And they do. And the politicians they make these donations to
have recognized this. And the lobbyists with clients eager to ensure
that these extenders are extended have recognized this.

And these flashes of recognition have now produced one of
the most efficient machines for printing money for politicians that
Washington has ever created — by focusing and practicing and con-
centrating the money to inspire ever more tax burdens on those
who don't organize well (you and me) so as to fund ever-lessening
tax burdens on those who organize perfectly well (the largest cor-
porations and the very rich). Mancur Olson would not have been
happy that he was so right. 34

The pattern is obvious. As Kysar quotes one lobbyist:

With the extenders, you know you always have someone who
will help pay the mortgage. You go to the client, tell them
you're going to fight like hell for permanent extension, but tell
them it's a real long shot and that we'll really be lucky just to get
a six-month extension. Then you go to the Hill and strike a deal
for a one-year extension. In the end, your client thinks you're a
hero and they sign you on for another year. 35

The cost of this game is only growing. In December 2010,
the Wall Street Journal reported on "extender mania." As they
described, in the 1990s there were "fewer than a dozen" tax
extenders in the U.S. tax code. 36 Now there are more than 140. The
Journal, however, didn't even notice the dynamic at the core of
Kysar's argument. But to you it should be obvious. The system is
learning, evolving, developing an ever-more-efficient way to create
the incentive for people to contribute to campaign coffers: create
a mechanism that threatens a tax increase unless a reprieve can
be bought, and at least among those who can afford the reprieve
(meaning the lobbyists and the funders), you can be certain that
that reprieve will be bought. December 2010 saw the huge battle
over whether "Bush tax cuts" would be extended for the very rich.
But that was just a small part of the struggle that was actually going

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206 BEYOND SUSPICION

on. It was instead a gaggle of special benefits that got magically
extended, through a dance that included billions spent on cam-
paigns and lobbyists by those who got the special benefit.

And thus have we produced the inverse of the world that Rea-
gan predicted when he said he quoted Tytler. But with us, at least
in the context of taxes, the problem is not the voters' voting
themselves "largesse out of the public treasury." The problem
is Congress's learning how it can threaten the richest in our soci-
ety with higher taxes, so as to get them to give the endless cam-
paign cash Congress needs. So, modifying Tytler just a bit, we
could say:

A democracy cannot exist as a permanent form of government.
It can only exist until the voters [congressmen] discover they
can vote themselves largesse out of the public treasury [by
playing around with the tax code] . From that moment on the
majority [in Congress] always votes [to sunset the tax benefits
of] the candidate [the citizens and corporations] promising the
most benefits from [to] the[ir campaign] treasury — with the
result that democracy always collapses over loose [tax] policy.

New York real estate mogul Leona Helmsley famously said, "We
don't pay taxes. Only the little people pay taxes." 37 Now you have a
sense just why.

But what about Reagan's 1986 tax reform? you ask. You've already
called it his most important tax legislation. Didn't it radically sim-
plify that tax code? Doesn't that prove your theory wrong?

Would that it did. Reagan's 1986 reform was brilliant. It was
bipartisan, and real reform. It eliminated a world of tax breaks and
special deals. It seemed to signal (to the hopelessly naive at least)
that the special interests had lost. Reagan the reformer (with the
help of key Democrats in Congress) had radically transformed the
mother of all special-interest legislation: the tax code.

Almost overnight, however, everything undone by the 1986
reform was replaced very soon after. As Hacker and Pierson

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How So Damn Much Money Defeats the Right 207

describe, "If you take a good look at the tax code now, you'll see
that it is chock-full of new tax breaks, far more expensive than the
ones eliminated with such fan fare." 38

I once was on a conservative talk show, talking about just these
issues. "You're wrong," the Glenn Beck wannabe scolded me, "all
our problems would be solved if we had a flat tax."

"Maybe," I responded. "But how are you going to get a flat tax?
What congressmen are going to give up the benefits they get from
having a bunch of rich people and corporations coming to them
each year begging for more tax benefits? "

The tax system is many things. It is first a revenue system for
our government. But it is also an indirect revenue system for con-
gressional campaigns. The critical insight here is to see just how
complexity in the system is an enabler of the latter, even if it is
intended to be the former. It is because no one understands the sys-
tem that targeted benefits are relatively cost-free to those who give
them. No one has the time even to recognize how this dynamic
shifts the tax burden to those who can least defend against it. And
more important for those who want a simpler tax system: Too few
see how this dynamic ensures that simplicity is never achieved.
One tax rate for everyone would give no one a special reason to
write a check to their congressman. That's all you need to know to
understand why we're never going to get one tax rate for everyone.
So long as tax favors can inspire campaign funds, the game of tax
favors will continue.

Thus again we could say: Getting a system of simpler taxes is dif-
ficult enough. Getting a system of simpler taxes when Congress has
a direct financial interest in complexity might well be impossible.

3. Keeping Markets Efficient

Theorists and principled souls on the Right are free-market advo-
cates. They are convinced by Hayek and his followers that markets
aggregate the will of the public better than governments do. This
doesn't mean that governments are unnecessary. As Rajan and

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208 BEYOND SUSPICION

Zingales put it in their very strong pro-free-market book, Saving
Capitalism from the Capitalists (2003), "markets cannot flourish
without the very visible hand of the government, which is needed
to set up and maintain the infrastructure that enables participants
to trade freely and with confidence." 39 But it does mean that a soci-
ety should try to protect free markets, within that essential infra-
structure, and ensure that those who would achieve their wealth
by corrupting free markets don't.

Yet often the biggest danger to free markets comes not so much
from antimarket advocates (the Communists and worse!) as from
strong and successful market players eager to protect themselves
from the next round of strong and successful market players. As
Rajan and Zingales describe: "Capitalism's biggest political enemies
are not the firebrand trade unionists spewing vitriol against the sys-
tem but the executives in pin-striped suits extolling the virtues of
competitive markets with every breath while attempting to extin-
guish them with every action." 40

The perpetual danger is that this competition will be "distorted
by incumbents," 41 because of an obvious fact not about markets,
but about humans: "Those in power ... prefer to stay in power.
They feel threatened by free markets" 42 — even if it was free markets
that gave them their power!

This is not a new point. Adam Smith, founding father of the
modern free-market movement (even if, like most founding fathers,
his work is only indirectly and partially understood by those who
follow him most vigorously), famously condemned the very heroes
of free-market wealth: "People of the same trade seldom meet
together, even for merriment and diversion, but the conversation
ends in a conspiracy against the public, or in some contrivance to
raise prices." 43

It was from this recognition that Smith offered his rule for inter-
preting any proposal by successful incumbents for regulating the
market. Such proposals, Smith said, "ought never to be adopted till
after having been long and carefully examined, not only with the
most scrupulous, but with the most suspicious attention." 44

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How So Damn Much Money Defeats the Right 209

For such proposals "come . . . from an order of men, whose inter-
est is never exactly the same with that of the public who gener-
ally have an interest to deceive and even oppress the public, and
who accordingly have, upon many occasions, both deceived and
oppressed it." 45

Thus, as an example, Rajan and Zingales point to Congress's aid
for the tourism industry after 9/11: "The terrorist attacks affected
the entire tourism industry. But the first legislation was not relief
for the hundreds of thousands of taxi drivers or restaurant and
hotel workers, but for the airlines, which conducted an organized
lobbying effort for taxpayer subsidies." 46

Principled souls on the Right thus worry about how to protect,
as Rajan and Zingales put it, capitalism from the capitalists. As Rajan
writes in his own work, "The central problem of free-enterprise
capitalism in a modern democracy has always been how to balance
the role of the government and that of the market. While much
intellectual energy has been focused on defining the appropriate
activities of each, it is the interaction between the two that is a cen-
tral source of fragility." 47

This is a worry because there are only two things we can be cer-
tain of when talking of free markets: first, that new innovation will
challenge old; and second, that old innovation will try to protect
itself against the new. Again and again, across history and nations,
the successful defend their success in whatever way they can.
Principles — such as "I got here because of a free market; I shouldn't
interfere with others challenging me by interfering with a free
market" — are good so long as they don't actually constrain. Once
they constrain, the principles disappear. And once they disappear,
the previously successful use whatever means, including govern-
ment, to protect against the new. This was one of the problems the
Progressives fought against: "To destroy this invisible government,
to dissolve the unholy alliance between corrupt business and cor-
rupt politics is the first task of the statesmanship of the day." 48 This
is one of the battles that should join progressives of the Left and
free-market advocates on the Right.

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210 BEYOND SUSPICION

Rajan and Zingales offer a range of remedies to secure a free
society from this type of market protection. The most interesting
I've described: the notion of a political antitrust doctrine, a doc-
trine that aims at blocking not only inefficient economic behavior,
but also concentrations in economic power that could too eas-
ily translate into political power. In this, their work echoes Louis
Brandeis, who opposed "bigness" not just for (mistaken) economic
reasons, but more important, because of the view that "in a demo-
cratic society the existence of large centers of private power is dan-
gerous to the continuing vitality of a free people." 49 It also echoes
the battles by Presidents Jefferson and Jackson centuries ago, who
both fought the first Bank of the United States, because both "saw a
powerful bank as a corrupting influence that could undermine the
proper functioning of a democratic government." 50

But the one point that Rajan and Zingales strangely leave aside
is the effect of the corruption I've described here on the capac-
ity for capitalists to corrupt capitalism. So long as wealth can be
used to leverage political power, wealth will be used to leverage
political power to protect itself. This was Teddy Roosevelt's view:
"Corporate expenditures for political purposes . . . have supplied
one of the principal sources of corruption in our political affairs." 51
But however clever political antitrust might be, a more fundamen-
tal response would be to weaken the ability of wealth to leverage
political power. Never completely. That would not be possible. But
at least enough to weaken the return from rent seeking, perhaps
enough to make ordinary innovation seem more profitable.

Any reform that would seek to weaken the ability of wealth
to rent-seek would itself be resisted by wealth. So long as private
money drives public elections, public officials will work hard to
protect that private money. And if you doubt this, look to Wall
Street: never has an industry been filled with more rabid libertar-
ians; but never has an industry more successfully engineered gov-
ernment handouts when the gambling of those libertarians went
south. When threatened with our existence, none of us — including

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How So Damn Much Money Defeats the Right 211

principled libertarians — will stand on principle. The Right needs
to recognize this as well as the Left.

All three examples point to a step in arguments from the Right that
too many too often overlook. I've been in the middle of literally
thousands of arguments in which someone on the Right (and I was
that person for many years) invoked a common meme: something
like "This problem too would be solved if we simply didn't have
such a big/invasive/expensive government."

Maybe. But the point these three examples emphasize is that
you can't simply assume away the problem you've identified. If you
believe big or expensive government is the problem, then what are
you going to do to change it? How are you going to shrink it? What
political steps will you take toward the end that you seek?

My sense is that too many on the Right make the same mistake
as many on the Left. They assume that change happens when you
win enough votes in Congress. Elect a strong Republican major-
ity, many in the Tea Party believe, and you will elect a government
that will deliver the promise of smaller government and simpler
taxes — just as activists on the Left thought that they could elect a
strong Democratic majority and deliver on the promise of mean-
ingful health care reform, or global warming legislation, or what-
ever other reform the Left thought it would get.

What both sides miss is that the machine we've evolved sys-
tematically thwarts the objectives of each side. The reason for the
thwart is different on each side. Change on the Left gets stopped
because strong, powerful private interests use their leverage to
block changes in the status quo. Change on the Right gets stopped
because strong, powerful public interests, Congress, work to block
any change that would weaken their fund-raising machine.

The point is not that the Right agrees with the Left. They don't.
The ends that both sides aim for are different.

But even if the Left and the Right don't share common ends,
they do share a common enemy. The current system of campaign

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212 BEYOND SUSPICION

funding radically benefits the status quo — the status quo for pri-
vate interests and the status quo of the Fund-raising Congress.

The same dynamic will thus work against both types of reform.
Private interests will flood D.C. with dollars to block change that
affects them. And government interests, as in congressmen, will
keep the grip tight on large, intrusive, complicated government, in
part because it makes it easier to suck campaign dollars from the
targets of regulation.

The existing system will always block the changes that both
sides campaign for. Both sides should therefore have the same
interest in changing this system.

This is not a new point, though it is strange how completely it gets
forgotten. In 1999, Charles Kolb, a Republican and former George
H. W. Bush administration official, led the Committee for Economic
Development (CED) to take a major role in pushing for campaign
finance reform. The CED describes itself as "a non-profit, non-partisan
business led public policy organization." Since 1942 the CED has
pushed for "sustained economic growth." It has been well known for
pushing for that growth from a relatively conservative position.

Central to its mission since 1999 has been the argument that the
existing system of campaign funding is broken. As it wrote in its
first campaign financing report,

The vast majority of citizens feel that money threatens the basic
fairness and integrity of our political system. Two out of three
Americans think that money has an "excessive influence" on
elections and government policy. Substantial majorities in poll
after poll agree that "Congress is largely owned by the special
interest groups," or that special interests have "too much influ-
ence over elected officials." Fully two-thirds of the public think
that "their own representative in Congress would listen to
the views of outsiders who made large political contributions
before a constituent's views."

These findings, typical of the results of public opinion
surveys conducted in recent years, indicate a deep cynicism
regarding the role of money in politics. Many citizens have lost

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How So Damn Much Money Defeats the Right 213

faith in the political process and doubt their ability as individu-
als to make a difference in our nation's political life. Americans
see rising campaign expenditures, highly publicized scandals
and allegations regarding fundraising practices, and a dramatic
growth in unregulated money flowing into elections. 52

The CED was "deeply concerned about these negative public
attitudes toward government and the role of money in the political
process." It was "also concerned about the effects of the campaign
finance system on the economy and business." For "[i]f public
policy decisions are made — or appear to be made — on the basis
of political contributions, not only will policy be suspect, but its
uncertain and arbitrary character will make business planning less
effective and the economy less productive."

The solution, the CED argues, is for business to be less tied to
campaign fund-raising. "We wish," as the report states, "to com-
pete in the marketplace, not in the political arena." 53 Because,
again, that competition doesn't create wealth or produce new jobs.
It just fuels the very rent seeking that all good conservatives should
oppose.

The CED does. More should.

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CHAPTER 13

How So Little Money Makes
Things Worse

t the start of the Soviet Union, the average salary of members
of the Politburo was said to be not far from the salary of the

average worker. 1 This equality expressed an ideal within the Soviet
system — the ideal that the USSR was a workers' state and that state
employees, even leaders, were no better than other workers.

That expression was a lie. While the formal salary of members
of the Politburo was close to the average salary for Soviet work-
ers, the effective salary was much, much higher. Members of the
Politburo got vacation homes (dachas), access to Western stores,
government-issued cars with drivers, foreign publications, better
health care, and better opportunities for their kids. Meaning gov-
ernment employees were in effect actually highly paid relative to
the average worker, or anyone else in Soviet life. The only way to
make more in the Soviet system was to be a criminal (assuming
there was a sharp distinction between members of the Politburo
and criminals).

America isn't the Soviet Union. But in a weird way, our Con-
gress is quickly becoming a kind of Politburo. Tenure for members
of Congress now exceeds the average tenure of members of the
Politburo. (House: ten years. Senate: twelve years. 2 Politburo: just
over nine years. 3 ) And more troubling is the way that Congress
effectively inflates its salary. Through games quite Soviet, many
members of Congress live like millionaires, even though their take-
home salary is the same as the very best students who graduate
from Harvard Law School in their first year practicing law.

Now let me be clear about the criticism I intend to offer in

214

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How So Little Money Makes Things Worse 215

this chapter. The salaries of key officials in our government strike
many as high. Some believe them too high. The last amendment to
our Constitution was for the very purpose of blocking any salary
increase for members of Congress until after an election. It is a com-
mon populist refrain among critics of government that the "bureau-
crats" are paid too much. Even worse, members of Congress.

The populist view is wrong. What we know from economics,
and from experience with governments across the world, is that
if you underpay government officials relative to their talents or
their peers, they will find ways to supplement their income. Those
supplements are not cost-free, even if they cost the Treasury noth-
ing. They sometimes involve outright bribes. (Norman Ornstein
explains the "inexplicable petty corruption of powerhouses like
Dan Rostenkowski and Ted Stevens ... by their belief that they were
making such immense sacrifices to stay in public service.") 4 But
in America, at least with members of Congress and senior mem-
bers of the administration, that sort of bribery is not the problem.
The real danger is that policy gets bent, through the unavoidable
influence spread by those who need the favor of government. If, as
Congressman Jim Cooper told me, "Capitol Hill has become a farm
league for K Street," then no one should doubt that players on a
farm league do everything they can to get to the majors.

Yet the purpose of this chapter is not to argue that we should
increase the salaries of government officials. We should. But so, too,
should people stop smoking and stop "breakfasting" at Dunkin'
Donuts. There's a limit to what's possible. I recognize that limit
here. I'm not going to fell trees on the fool's errand of trying to per-
suade you to rally with me to increase Barney Frank's pay.

Instead, the point of this chapter is to underline why the fact
that we underpay government officials will make it much harder
to change how Congress now works. The very mechanisms that
we have evolved to compensate for our undercompensated govern-
ment workers make change through ordinary political means enor-
mously difficult, and, just maybe, impossible. 5

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216 BEYOND SUSPICION

The Ways We Pay Congress

Some in Congress don't give a squat about how much they're paid.
Some don't care because they're millionaires. (Indeed, 44 percent
of members of Congress are millionaires, compared with 1 percent
of the American public.) 6 Some of them spent millions to get to
Congress in the first place. To them, government service is a lux-
ury good. They are proud to serve. They'd be proud to serve even
if the salary were zero (or negative — which it is for most who self-
fund their campaigns).

Others don't care about how much they're paid because they're
married to wealthy spouses. That spousal income is sometimes
completely benign. (Senator Ron Wyden's [D-Ore.; 1981- ] wife
owns the Strand bookstore in New York City. There are not many
policies that get bent by the influence of used-book store owners.)
Sometimes it is much less benign. (When Indiana senator Evan
Bayh [D-Ind.; 1999-2011] was elected to the U.S. Senate, his thirty-
eight-year-old wife, a junior law professor at Butler University and
a mid-level attorney at Eli Lilly, got appointed to the board of the
insurance company that would become WellPoint. No doubt Susan
Bayh is a talented soul. But as the website TheStreet commented
when the appointment was made, "Her work background at the
time she was appointed . . . would have been surprising, given that
she had no insurance experience and was relatively young and inex-
perienced to serve as a director on a multibillion-dollar board." 7
One can't help but wonder whether that appointment would have
been made but for the marriage, or whether the policies of the sen-
ator weren't affected by the affiliations of the spouse. 8 ) But in most
cases, these members with wealthy spouses are not likely looking
for ways to make things easier financially for themselves.

Finally, some members don't care about the size of their salaries
because they come from inexpensive districts, and don't have kids,
and do okay on the salary Congress provides. They share an apart-
ment in D.C. with a colleague. They come home as frequently as

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How So Little Money Makes Things Worse 217

they can. They find JCPenney to be an especially talented fashion
designer.

Put all of these three types of congressmen aside. In what fol-
lows, I'm not talking about them.

Instead, think about those who aren't rich, who don't have a
high-income-earning spouse, and who don't come from rural West
Virginia. Think about a member from Seattle, or Boston, or San
Francisco. Imagine that member needs to keep a home in the dis-
trict, but brings her family to D.C. Imagine her spouse is a school-
teacher, and they've got three kids. Think about what a member
like that does.

There are a number of ways that members like these can cope
with the salary they get. Some cut costs by living in their office —
literally, sleeping on a couch and showering in the gym. Some sim-
ply suck it up, and serve for a relatively short time before returning
to private life. And some do something more — by securing a future
for themselves that compensates for the (relatively) low pay of their
present.

The motives of the members in this group need not be ques-
tioned. Many just simply can't afford perpetual service to a low-
paying government, at least if they're going to afford to raise a
family. Or at least, if they're going to raise a family the way their
family might reasonably expect, given their talents and the com-
parable opportunities. Whatever the pressure, the question I mean
to raise is about the work these members do after their life in
Congress. Because if their plan is to enter the influence market
that D.C. has become, then they can't help but develop a depen-
dency upon that market doing well. It's not just the need to keep
future employers happy. That's a possible but, I think, distant con-
cern that would rarely extend its reach into the day-to-day work of
the job.

Instead, the real problem is imagining a soul like this voting to
destroy a significant chunk of the value of this influence industry —
which fundamental reform of the type that I discuss in chapter 15

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218 BEYOND SUSPICION

would do. For if lobbyists weren't able to channel funds to cam-
paigns, and hence, if congressmen didn't depend upon lobbyists to
get them the resources they need to run, then the value of lobbying
services would decline. Lobbyists' market power would decline.
And hence the ability of lobbying firms to pay former members of
Congress millions would disappear. If "Capitol Hill is a farm league
for K Street," then imagine asking players on a baseball minor-
league team whether salaries for professional baseball players
should be capped, and you will quickly get the point.

Of course there are members who would ignore that conse-
quence. Of course there are some who would do the right thing,
regardless of how it affected them personally. But fortunately or
not, members of Congress are humans. They are much more likely
to develop all sorts of rationalizations for keeping alive the system
that will keep them millionaires. You think you wouldn't? You
think they are so different from you?

Life after Congress is thus one reason why members would be
reluctant to think about fundamentally changing the economy of
influence that governs D.C. today.

A second reason is much more contemporary (with a member's
tenure), and much more disgusting.

Members of Congress are not members of the Politburo. Unlike
with members of the Politburo, the salary of a member of Congress
is basically it. They don't get a housing stipend. For most of them
there are no fancy government limos driving them from one place
to another. There's no summer dacha. There are no free flights on
government planes. As for most of us, their salary is their salary.

But unlike for most of us, their salary is not all they get to live on.
Rather, members of Congress have perfected a system that allows
them to live a life a bit more luxurious than a first-year associate at a
law firm. And the way they do this ties directly to the need to raise
campaign cash.

Many members of Congress (at least 397, according to the Cen-
ter for Responsive Politics) 9 have leadership PACs. A leadership PAC
is a political action committee that raises money from individuals,

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How So Little Money Makes Things Worse 219

and other PACs, and then spends it to support candidates for office.
Members of our Congress stand in the well of the House handing
one another checks for up to $5,000. Such checks are the glue that
keeps the system together.

Raising money, however, costs money. These costs are the
expenses that a leadership PAC incurs. A member of Congress
might want to take a potential contributor to dinner. That costs
money — especially today in D.C., which now has some of the most
expensive restaurants in the United States. Or if the member really
wants to impress the potential contributor, she might take him on
a golfing trip, or to a "retreat" in a work-inducing location such as
Oahu. These things cost money, too. So the leadership PAC must
raise money to spend money to raise money.

But much of the way the leadership PAC spends its money ben-
efits, in a perverse sort of way, the member of Congress. A mem-
ber from California, not independently wealthy, with a spouse who
doesn't work, and who is trying to raise three kids, doesn't have
much money for fancy dinners if the family lives near D.C. Even
less if the family stays in the district and the member has to main-
tain two residences.

So how does that member get to go to fancy restaurants?

He sets up a leadership PAC, and all doors are open. As Jeff Birn-
baum reports, "More than one lawmaker . . . was willing to declare
almost any lobbyist-paid meal a fund-raiser as long as the host of
the dinner didn't just pick up the check but also provided one as
well — eventually." 10

The numbers here are really quite amazing. In the 2010 election
cycle, leadership PACs collected more than $41 million in contribu-
tions. 11 But there's no actual obligation that members spend this
PAC money on other members. So here's just some of the delicious/
disgusting (you pick) tidbits that public records reveal:

• " [Thirty] Democrats and 17 Republicans . . . collected
$1.07 million collectively without spending a dime on
other candidates."

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220 BEYOND SUSPICION

• "A committee created by Rep. Rodney Alexander (R-La.)
[2003- ], called Restore Our Democracy, collected nearly
$100,000 this [2010] cycle and spent nearly two-thirds to
finance his participation with donors or friends in two

Mardi Gras balls Alexander's committee has not used

any funds directly for an election campaign."

• Two-thirds of expenditures of then-House minority
leader John Boehner (R-Ohio; 1991- ) have gone toward
fund-raising costs, which included "fine meals and trips
to luxurious resorts," . . . "including $70,403 at the Ritz-
Carlton in Naples, Florida, and more than $30,000 at Dis-
ney" resorts.

• House majority leader Steny Hoyer (D-Md.; 1981- ) spent
more than $50,000 on "travel with donors to resorts" in
the 2010 election cycle, including $9,800 on entertain-
ment tickets and limousines.

• House minority whip Eric Cantor (R-Va.; 2001- ) raised
$2.1 million for his leadership PAC, and spent $136,000
on golf events, baseball games, skiing, and restaurants. In
November 2009 his leadership PAC spent $30,000 "on a
Beverly Hills fundraising event." 12

• Rep. Charlie Rangel (D-N.Y.; 1971- ) used funds from his
leadership PAC to commission a portrait of himself. 13

All this luxury would go away if Congress were to end special-
interest fund-raising as the means to getting reelected. Members
would have to live on the salary they got. They would have to pay
for their own dinners. Holidays would be at Ocean City (New Jer-
sey), not Oahu or the south of Florida.

Now, again, I'm sure there are members of Congress who'd be
okay with this. I'm sure many would be happy to make do with the
salaries they got.

But I'm equally sure that there are many who recognize that a
congressional pay raise is not in the offing, and that living life on
$187,000 is not what they bargained for. Some who recognize this

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How So Little Money Makes Things Worse 221

might well decide to leave office. But many more would fight the
reform of this system to its death.

There's no easy way to figure out if a candidate for Congress is
either (a) the sort who's going to be happy living frugally, or (b)
the sort who's going to pretend he'll be happy but then live life
taking every advantage he can. Other countries get this, and rather
than risk it, they pay their representatives a high, but competitive
rate. Ministers in Singapore, for example, rated the least corrupt
country (tied with Denmark and New Zealand) by Transparency
International, make about $1 million a year. 14

But this problem is not likely to be fixed anytime soon. (And rais-
ing salaries without also fixing the way we fund elections would
certainly be no solution.) But if we're not going to decide that mem-
bers of Congress make too little; if we're not going to recognize
that underpaying people only gets us bad people, or turns good
people bad, then the prospect that we're going to get members of
Congress to vote to support a new system of campaign finance just
got much, much worse. For the choice to make Washington clean
is now a choice to make a member poor.

The Benefits of Working for Members

The bigger challenge, however, may not be with the 535 members,
or, more precisely, the proportion of the 535 who are not rich or
who didn't marry rich or who don't live in West Virginia. The big-
ger challenge may be with their staff, and with the staff of every
major regulatory bureaucracy.

Here, again, we've opted for government on the cheap. Staffers
on Capitol Hill get paid on average between $29,890.54, for a staff
assistant, and $120,05155, for a chief of staff. The maximum salary
earned by any staffer is $172,500. (Forty-three staffers earned this
level of pay in 2010.) 15 The chairman of the SEC earned $162,900
in 2009- The average starting salary for an attorney at the SEC is
$78,000. 16 By contrast, the starting salary for an analyst working in
investment banking on Wall Street with just a bachelor's degree is

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222 BEYOND SUSPICION

from $100,000 to $130,000 after bonus. 17 As study after study has
concluded, we pay our government too little. 18 The same is true of
state and local governments. 19

So why, then, do government officials choose to work for so
little?

No doubt some of them do it because they believe in public ser-
vice. They could get a job anywhere, but they work for the govern-
ment because they want to do something that does something for
America. General Petraeus is not wanting for employment options.
Neither was David Walker, the former (and fantastic) comptroller
general of the United States. These are people who serve because
service is in their DNA.

There are many souls like this throughout American society.
They are soldiers who work for less because they believe they are
working for something more. They are teachers who work for less
because they believe they are working for something more. Doc-
tors at NIH, lawyers at the Justice Department, federal judges — the
government is filled with people who do what they do for reasons
other than money. We are fortunate to have such people among us.
We should think hard about how to have more.

Not every staffer working on Capitol Hill, however, is working
for nothing because she believes in something. And not every regu-
lator at the SEC is earning less than his equal on Wall Street because
he believes his work will make society a better place.

Instead, living in the "farm league," some of those people see
their time on the Hill, or within major regulatory agencies, as an
investment. They work for six or eight years as a staffer to a major
committee, then they cash out and become a lobbyist. An expe-
rienced staffer leaving Capitol Hill can expect a starting salary of
about $300,000 per year. Some senior staff members have been
known to secure salary and bonus packages of $500,000 or more.
If the senator whom a staffer worked for is still in office, the staffer
can receive as much as $740,000. 20 Heads of agencies do much bet-
ter: In 2011, Michael Powell, former chairman of the FCC, became
chief lobbyist for Comcast, and was reported to be making more

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How So Little Money Makes Things Worse 223

than $2.2 million per year. In the same year, FCC commissioner
Meredith Attwell Baker left the commission to join Comcast after
voting to approve Comcast's merger with NBC Universal.

This gap in salaries is an enormous change. In 1969 a "newly
minted lobbyist with solid Capitol Hill experience could count on
making a touch more than the $10,000 they earned as congressio-
nal staff. Today, the congressional staffer making $50,000 can look
at a peer making five or six times that much as a lobbyist." 21

The prospects are even better if you enter the revolving door.
Start your career as an associate at a law firm, leave to spend a few
years as a staffer on the Senate Committee on Banking, Housing
and Urban Affairs, and return to that law firm as a principal making
hundreds of thousands if not millions a year, where you will repre-
sent numerous financial institutions before the Senate. 22 As of 1987,
"most of the administrative assistants or top congressional staffers
in the House spent 5.5 years working in Congress." A decade later,
the average tenure had fallen by more than 25 percent. 23 Between
1998 and 2004, 3,600 former congressional aides had "passed
through the revolving door." 24

In both of these types of cases, the government employee traded
her experience for cash. And as the amount of cash that gets traded
goes up, more and more will enter government service with that
trade in mind.

Again, sometimes this trade is completely benign. After World
War II, fighter pilots became commercial pilots. They were paid
(practically) nothing to risk their lives to protect America. Then
they were paid lots more because of the experience they'd earned
while serving to protect America. No one thinks that the prospect
of becoming a commercial pilot somehow compromised the ser-
vice of the military pilot. Indeed, to the contrary: the lucrative post-
service salary made it easier to get great pilots to serve in the war.

Sometimes, however, that trade is not at all benign.

Consider, for example, the lobbying firm PMA Group, Inc., cre-
ated and run by staff alumni of Representative John Murtha (D-Pa.;
1974-2010). In 2008 that firm persuaded 104 different House

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224 BEYOND SUSPICION

members to add separate earmarks into the defense appropriations
bill worth $300 million to PMA Group clients. These same lawmak-
ers have received $1.8 million in campaign donations from the lob-
bying firm since 2001. When these deals came to light in 2009,
the PMA Group closed shop. Its founder, former Murtha aide Paul
Magliocchetti, pled guilty to illegally laundering political contribu-
tions, and was sentenced to twenty-seven months. 25

Or consider a second example: When an artist records an album,
the artist gets the copyright. For many years, the recording indus-
try has wanted that rule changed, so that the company making the
recording, by default, gets the copyright. This is no small matter:
for many artists, and their heirs, the copyright to the recording is
the most important right they get. In 1999, Mitch Glazier, the chief
counsel to the Subcommittee on Courts and Intellectual Property
in the House of Representatives, is said to have inserted into a bill
of technical corrections to the Copyright Act a fairly fundamental
change: an amendment that classified many recordings as "work
made for hire" (meaning the record company, not the artist, would
by default get the copyright). Immediately after he allegedly did
this, Glazier left Capitol Hill and became senior vice president of
governmental relations and legislative counsel for the Recording
Industry Association of America. 26

Our government is shot through with examples like this, far
beyond the problems with Congress. A huge proportion of the
"staffers" who support the military move seamlessly from private
defense contractors to the government and back again, keeping
their security clearance, doing the same sort of work, but some-
times at a high salary (when private) and sometimes at a low sal-
ary (when for the government). The rotation balances out to a very
nice salary on average, but many would not be in this service if the
private part didn't complement the public.

Again, maybe sometimes this accommodation is completely
harmless. Much more often, these relationships earn the insid-
ers something special, whether it is special access to members
of Congress that a lobbyist firm then sells to clients, or a special

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How So Little Money Makes Things Worse 225

relationship that an ex-staffer can use to influence an enforcement
decision, or simple friendship so that their arguments will be given
greater credibility than those of others, and can be used to delay
action on an issue. 27

The best evidence of this influence is a recent paper that studied
the effects on a staffer turned lobbyist when the member that for-
mer staffer worked for left Congress. Drawing upon the extensive
data provided by the lobbying disclosure reports, political scientist
Jordi Blanes i Vidal and his colleagues were able to calculate that a
lobbyist with experience in the office of a senator sees a 24 percent
drop in lobbying revenues immediately after that senator retires. 28

When you look at these numbers, it is hard to understand them
as anything except direct evidence of the channels of influence
that the current system buys. In other words, the value of these lob-
byists was to a significant extent a function of their connections.
But why? What was the connection so valuable to the firm, if the
connection itself wouldn't translate into significant legislative ben-
efit to the clients of the lobbying firm?

There's nothing evil in the story of these staffers turned lobby-
ists. Or at least, there need be nothing evil. These are not people
securing bribes; they are not even necessarily working against the
ideals they believe in. Indeed, most of them are doing jobs they
love. In this sense, they're living an American dream, honorably
and honestly, in the vast majority of cases.

The issue here is not whether these people are good. The issue
is whether the system they work within is corrupt. Does it tend to
distract members from their constituents? Does it build a depen-
dency that conflicts with the dependency intended?

Of course it does. Or at least, most Americans would be justi-
fied in believing it did. This is just another example of how the
current system differs fundamentally from the system our Framers
intended. It is another example of a difference that matters.

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CHAPTER 14

Two Conceptions of "Corruption

o now I have to do some work. Some law work. I've walked

i^J you through an understanding of the corruption that is our gov-
ernment. That understanding differs from the standard story. It is
more complex, more human, more difficult to change.

Now I need to tie that more complex story back to some legal
doctrine. For our Supreme Court seems to say that there's very lit-
tle that Congress could do, constitutionally, to fix the problems I've
described. Congress can, constitutionally, remedy "corruption," the
Court says. But the Court's understanding of "corruption" excludes
the problems I've described. It should not, and in the balance of
this chapter, I try to make this point bulletproof.

I do this as an act of respect. The Supreme Court is not, in the
sense I have described, corrupt. Quibble as we might about its sen-
sitivity to politics, the Court is a gem of institutional integrity. If
the Court just reflected a bit on why it had that integrity, it would
understand a bit more why it must give Congress the opportunity
to secure the same for itself.

The ordinary meaning of corruption — at least when we're speak-
ing of government officials, or public institutions — is clear enough.
Corruption means bribery. Taking this (money) in exchange for
that (special favor or privilege from the government). Quid pro quo.

In this sense, Congressman Randy "Duke" Cunningham (R-Calif;
1991-2005) was corrupt. The government charged that he took over
$2.4 million in exchange for securing contracts from the Defense
Department. Duke was convicted, and sentenced to eight years and
four months in prison. 1

226

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Two Conceptions of "Corruption" 227

In this sense, Congressman William J. Jefferson (D-La.; 1991-
2009) was corrupt. In a raid on Mr. Jefferson's home, federal agents
found $90,000 wrapped in aluminum foil in his freezer. He was
charged with receiving up to $400,000 in bribes and alleged to
have sought much more. 2 In 2009 he received the largest prison
sentence for corruption in the history of the United States Con-
gress: thirteen years.

These are both classic instances of bent and bad souls. They are
the stuff the U.S. Criminal Code was written for.

And not just the Criminal Code. Since Buckley v. Valeo (1976)
it has been clear that Congress has the power to do more than just
criminalize quid pro quo bribery. It also has the power to ban con-
tributions that might raise the suspicion of quid pro quo bribery.
Buckley held, and no decision has ever doubted, that Congress has
the power to ban large contributions to a campaign, at least when
it is reasonable for people to wonder whether those large contribu-
tions are really just disguised bribes. As the Court said in Buckley :

Of almost equal concern as the danger of actual quid pro quo
arrangements is the impact of the appearance of corruption
stemming from public awareness of the opportunities for abuse
inherent in a regime of large individual financial contributions.
In CSC v. Letter Carriers, the Court found that the danger to
"fair and effective government" posed by partisan political con-
duct on the part of federal employees charged with administer-
ing the law was a sufficiently important concern to justify broad
restrictions on the employees' right of partisan political associ-
ation. Here, as there, Congress could legitimately conclude that
the avoidance of the appearance of improper influence "is also
critical ... if confidence in the system of representative Govern-
ment is not to be eroded to a disastrous extent." 3

Thus, even to avoid just the public's perception that members
may be selling their office, Congress has the power to limit the
extent to which one person can signal his support (through contri-
butions) for a political candidate.

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228 BEYOND SUSPICION

This is not an insignificant power. The liberty to contribute to
the campaign of another is an important free speech liberty. To
be able to say "I support Mr. Smith," not only in words, but also
with your money, is to be able to show just how much you support
Mr. Smith. That liberty is the freedom to signal intensity, in a way
that's credible and real. No government should have the power to
remove that liberty. At least not completely.

Yet despite the importance of that liberty, the Supreme Court
has upheld Congress's power to limit it so as to avoid the mere
impression that something more than simple praise is going on. So
important is it to our political system that the people not reason-
ably believe corruption is the game that Congress has the power to
restrict this political speech.

Call this type 1 corruption. As I've described, the law regulat-
ing type 1 corruption permits Congress to block it (through brib-
ery and illegal influence statutes), and to block contributions that
raise a reasonable suspicion of it.

But if there's a type 1 corruption, there is also type 2. And thir-
teen chapters into this book, this second sense should already be
clear.

Here's an example to refresh the recollection: think about the
independence of a judiciary. The job of a judge is to follow the law.
Some say that in Japan, judges follow more than the law. 4 Japanese
judges, these scholars argue, are sensitive not only to what the law
says, but also to whether a particular decision is likely to upset
the government. They pay attention to this extrajudicial concern
because (at least these scholars claim) the government controls
the promotion of judges on the basis of their "behavior." And so, if
you're a Japanese judge and don't want to end up in some regional
court in the countryside, you need to be certain not to anger those
who decide where you'll serve by deciding a case in a way that
goes against their (fairly transparent) interests.

I don't know whether these charges are correct — they likely
are, given the integrity of the source, but many (in Japan at least)
deny it. But imagine they were correct, because if they were,

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Two Conceptions of "Corruption" 229

they'd provide a perfect example of the second type of corrup-
tion I intend to flag here. One dependency upon the law, is in ten-
sion with a second dependency upon the will of the government.
Or, again, the independence of the judges, the freedom to decide
cases dependent only upon the law, is weakened because of this
second, conflicting dependency, upon the retaliating will of the
government.

We could make the same point without picking on the Japa-
nese. Think about the system that many states use to select their
judges: contested elections. Certainly one of the dumbest of the
Progressives' (and President Jackson before them) ideas, this sys-
tem has now spiraled into the most extreme example of campaign
cash weakening the public's trust of a crucial arm of government.
In the 2008 cycles, state supreme court candidates from across
the nation raised $45.6 million, seven times the amount raised in
the 1990 cycle. 5 This money yields "unprecedented pressure from
interest groups [on judges] to make decisions that are based on
politics," 6 not law, as former Supreme Court Justice Sandra Day
O'Connor writes. (Remember, O'Connor is no commie: appointed
by Ronald Reagan, she was one of the most important conservative
justices on the Rehnquist Court.) With "so much money go[ing]
into influencing the outcome of a judicial election," she continues,
"it is hard to have faith that we are selecting judges who are fair
and impartial." 1

And indeed, we don't "have faith." In a survey conducted in
2002, 76 percent of Americans said they thought "campaign contri-
butions influence judicial decisions." 8 Seventy percent of surveyed
judges expressed concern that "in some states, nearly half of all
supreme court cases involve someone who has given money to one
or more of the judges hearing the case." 9 Indeed, almost half (46
percent) of the state court judges surveyed in that 2002 survey said
they believe "contributions have at least a little influence." 10 Seventy-
nine percent of Texas attorneys believe that "campaign contribu-
tions significantly influence a judge's decision." 11 That number in
particular makes sense to me: one of my students reported on a

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230

BEYOND SUSPICION

study he had conducted that included one Texas judge who begins
each hearing by asking the lawyers to identify their firm, and then,
in front of everyone present, opens his contribution book to check
whether that firm had contributed to his reelection. 12

The suspicions of 76 percent of Americans, 70 percent of sur-
veyed judges, 46 percent of state judges, and 79 percent of Texas
attorneys are borne out by the empirical studies of judicial voting
behavior and contributions. Professor Stephen Ware, for example,
studied Alabama supreme court decisions from 1995 to 1999 and
found "the remarkably close correlation between a justice's votes
on arbitration cases and his or her source of campaign funds." 13 A
2006 study by New York Times reporters Adam Liptak and Janet
Roberts found that over a twelve-year period, Ohio justices voted in
favor of their contributors more than 70 percent of the time, with
one justice voting with his contributors 91 percent of the time. 14
One example from Louisiana is particularly amazing:

Justice John L. Weimer, for instance, was slightly pro-defendant
in cases where neither side had given him contributions, vot-
ing for plaintiffs 47 percent of the time. But in cases where he
received money from the defense side (or more money from the
defense when both sides gave money), he voted for the plain-
tiffs only 25 percent of the time. In cases where the money
from the plaintiffs' side dominated, on the other hand, he voted
for the plaintiffs 90 percent of the time. 15

"That's quite a swing," note the reporters. Yeah. No kidding.

In both the Japanese and the American cases of tarnished judi-
cial independence, the system that queers independence is a sys-
tem of corruption. Like the compass that deviates because of an
interfering magnetic field, the influence of the government (Japan),
or the influence of campaign funders (state courts in America), cor-
rupts the independence the judiciary intends. It weakens the fair-
ness of that system. It weakens public trust.

This is dependence corruption, and as applied to Congress, the

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Two Conceptions of "Corruption" 231

concept should be obvious: As with every other branch of our gov-
ernment, the Framers intended Congress to be "independent." But
as with the judiciary, "independent" didn't mean free to do what-
ever it wanted. Instead, as I described in chapter 10, an "indepen-
dent Congress" was to be one that was properly "dependent upon
the People alone." 16 That dependency was to be enforced by rapid
and regular elections (every two years for the House). It was to
be protected, for example, by blocking the executive from mak-
ing appointments to Congress, and blocking foreign princes from
giving gifts to Congress. And more. The Constitution is filled with
devices designed to ensure that Congress track the truth a democ-
racy intends it to track: the people. An "independent Congress" is
thus a representative body that remains dependent "upon the Peo-
ple alone."

That independence gets corrupted when a conflicting depen-
dency develops within Congress. A dependency that draws Con-
gress away from the dependence that was intended. A dependency
that makes Congress less responsive to the people, because more
responsive to it. In this second sense of corruption, it is not indi-
viduals who are corrupted within a well-functioning institution. It
is instead an institution that has been corrupted, because the pat-
tern of influence operating upon individuals within that institution
draws them away from the influence intended. 17

But aren't you just talking about a fancier version of quid pro
quo corruption? you ask. Or, put better: If we eliminated all quid
pro quo corruption, wouldn't we also eliminate all dependence
corruption?

No. Dependence corruption is not the aggregate of many
smaller cases of quid pro quo corruption. The two may overlap, but
they are not coextensive. To solve the one is not to solve the other.
To regulate one is certainly not to regulate the other.

To see this critical point (critical to the argument of this book
at least), consider just one example:

Imagine that a company, call it Bexxon, let it be known that it
intended to spend $1 million in any congressional district to defeat

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232

BEYOND SUSPICION

any representative who believed that the federal government
should enact climate change legislation. This spending would be
independent of any candidate's campaign. As the Supreme Court
has defined it, because it occurs in "the absence of prearrangement
and coordination," 18 it would not fall within the range of speech
properly regulable as campaign contributions. It is an "indepen-
dent expenditure."

If a representative learned of that intent, and decided to shape-
shift and adjust her view about the need for climate change
legislation — for example, by dropping a pledge to support climate
change legislation from her website, or removing her sponsor-
ship on a prominent bill — there 'd be little doubt that that change
was because of Bexxon's expressed intent. But there'd also be
little doubt that that change was not an instance of quid pro quo
corruption. There's no agreement. There's no act to carry out an
agreement. There's simply an expressed intent, and an action in

politically vulnerable representative.

Similarly, it's obvious the motive of this representative in adjust-
ing her view is not the motive of Randy "Duke" Cunningham
or William J. Jefferson. The question she asked herself was not
whether and how to benefit her own pecuniary interest. It was
instead how to benefit her own political interest. Her focus was on
the best means to avoid an enormous influx of campaign funding
that might well succeed in bringing her political life to an end.

I've already described how this shape-shifting is harmful to our
republic, even though the thing the shifting tries to secure — more
money for political speech — is pure. If there are compromises to
ensure the funding, the compromise is the harm. If there is distor-
tion to secure the funding, the distortion is the harm.

That there is distortion — or, again, more precisely, that it
would be completely and absolutely reasonable to believe there is
distortion — is the argument I made in chapter 10. "The funders"
are not "the People"; why would you expect the dance necessary
to attract "the funders" to be the same dance necessary to attract

response to that intent that preserves the political position of a

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Two Conceptions of "Corruption" 233

"the People"? It is reasonable to believe there is a gap between "the
flinders" and "the People," if only because in the most critical cases,
the vast majority of contributions to a congressional campaign are
not even from "the voters" in that district. At one point, Representa-
tive John Murtha (D-Pa.; 1973-2010) had raised over $200,000, with
only $1,000 coming from his district. 19 OpenSecrets.org reports that
67 percent of John Kerry's contributions in his 2008 reelection to
the Senate came from out-of-state donors. His Republican opponent
received 73 percent of his funding from outside Massachusetts. 20
MapLight reports that between January 2007 and March 2010,
79 percent of contributions to California state legislators came from
out-of-district contributors.

Even if you ignore this "out-of-district" effect, it is clear "the
funders" are not "the People." As Professor Spencer Overton puts
it, "Individuals with family incomes over $100,000 represented
11% of the population in 2004, cast 14.9% of the votes and were
responsible for approximately 80% of the political contributions
over $200." 21 Only 10 percent of American citizens give to political
campaigns; less than 0.5 percent are responsible for the majority
collected from individuals. 22

This gap between contributors and voters means that respon-
siveness to one is not necessarily responsiveness to the other. Or,
again, the sort of thing you need to do to make contributors happy
is not the sort of thing you need to do to make voters happy.

And so, once again: while it might not convince a political sci-
ence department, in my view, we have enough to say that this
competing dependency upon "the funders" is also a conflicting
dependency with "the People." Or that it is, in other words, an
instance of dependence corruption.

This conception of dependence corruption helps make sense of
the important distinction suggested by J. J. Wallis between what he
calls "venal corruption" and "systematic corruption." 23

Venal corruption, as Wallis puts it, is "the pursuit of private
economic interests through the political process. [It] occurs

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234 BEYOND SUSPICION

when economics corrupts politics." 24 Systematic corruption is in
a sense the opposite, " [m] anipulating the economic for political
ends [It] occurs when politics corrupts economics." 25 Or, again:

In polities plagued with systematic corruption, a group of poli-
ticians deliberately create rents by limiting entry into valuable
economic activities, through grants of monopoly, restrictive
corporate charters, tariffs, quotas, regulations, and the like.
These rents bind the interests of the recipients to the politi-
cians who create the rents. The purpose is to build a coalition
that can dominate the government. 26

With both forms of corruption, one could focus upon the bad
souls effecting the corruption, or upon the institutions that make
it possible.

The rhetoric of the Progressives focused upon "bad men rather
than on bad institutions." 27 But their remedy was structural changes
that would make it "more difficult for the few, and easier for the
many, to control." 28 The common thread in the enormously diverse
movement from Teddy Roosevelt to Louis Brandeis was a focus
upon corruption. The common remedies for this diverse move-
ment were changes that would make government more responsive
to a democratic will. 29

For conservatives (and the Framers), the focus was on bad
institutions that would encourage bad men. The remedy, in their
view, to systematic corruption was to "[f]irst. . .eliminate. . .the
pressure to create special corporate privileges by enacting consti-
tutional provisions requiring legislatures to pass general incorpora-
tion laws [rather than special (and privileged) corporate charters] .
[Likewise, to forbid] state and local investment in private corpo-
rations." 30 The intent was "to reduce the political manipulation of
the economic system ... by reducing the payoff to political machi-
nations." 31

Throughout the literature exploring this dichotomy, however,
there is an underdeveloped conception of responsibility with each

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Two Conceptions of "Corruption" 235

conception of corruption. It's plain enough how both forms of
corruption can occur when the actors involved in each intend it.
There's no such thing as an accidental bribe. And when we think
about Zimbabwe, it's hard to imagine Mugabe not meaning to pro-
duce the systematic dependency his regime has produced.

Yet when we think about these conceptions of corruption
against the background of the (federal) government today, it is
harder to believe that either conception of corruption is really com-
mon or pervasive. I've said again and again that I believe Randy
"Duke" Cunningham's crimes are rare. And it's hard to imagine the
government as even competent enough to plan a system where pri-
vate industry has to become essentially dependent upon it.

Venal and systematic corruption might flourish, however, with-
out either being expressly intended. That's the lesson of depen-
dence corruption. It builds a platform upon which both venal and
systematic corruption can emerge without having to believe that
individuals acting on that platform had a motive remotely as evil as
Randy "Duke" Cunningham's or William Jefferson's.

To see this, think again about the dynamic of this platform: the
crucial agent in the middle, the lobbyists, feed a gift economy with
members of Congress. No one need intend anything illegal for this
economy to flourish. Each side subsidizes the work of the other
(lobbyists by securing funds to members; members by securing
significant benefits to the clients of the lobbyists). But that subsidy
can happen without anyone intending anything in exchange —
directly. "The system" permits these gifts, so long as they are not
directly exchanged. People working within this system can thus
believe — and do believe — that they're doing nothing wrong by
going along with how things work.

Sometimes this going-along produces benefits that seem
venally corrupt. Because of a loophole in the tax system (one that
has existed since the 1960s), managers of hedge funds don't pay
ordinary income tax on the money they earn from hedge funds.
Instead, their "carried interest" gets taxed at 15 percent. 32 Thus,
though the top ten hedge fund managers in 2009 made, on average,

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236 BEYOND SUSPICION

$1.87 billion, they paid a lower tax rate on that income than their
secretaries. 33 Obama promised to change this. But that change was
blocked. It's very hard not to understand the very richest in our
society enjoying the same tax rate as individuals earning between
$8,000 and $34,000 as anything other than a kind of venal corrup-
tion. Yet again, no one needs to have intended any quid pro quo to
produce this result.

Likewise, sometimes this going-along produces benefits that
seem systematically corrupt. That was the example I described
with Al Gore's proposed Title VII of the Communications Act — a
government regulating for the purpose (in part at least) of produc-
ing a dependency by citizens (or corporations) on the government,
and thus producing a willingness to turn over wealth to the gov-
ernment (through campaign funds). So, too, with the complexity
of tax policy, or the constant role the government plays in agricul-
tural policy. All of these may well be instances of a government
deploying its power to create client dependencies, which in turn
it deploys to keep itself in power. But here again, all this could be
produced without anyone crossing any criminal line.

The clearest recent example of this sort of systematic corrup-
tion is the case of the Republicans the last time they controlled Con-
gress. In 1995, Tom DeLay (R-Tex.; 1985-2006), majority leader in
the House of Representatives, launched the "K Street Project." The
"brainchild of Grover Norquist," the K Street Project "embraced
the idea that trade associations, lobby shops, law firms, and corpo-
rate offices in Washington should be run by Republicans." 34 DeLay
is said to have personally told corporate "executives not to send
Democrats to try to lobby him." 35 Gingrich and DeLay had curried
favor with business, and as Kaiser comments about the role in 1996
and 1998, "they obviously expected favors in return in the form of
contributions. The mutual dependence between Capitol Hill and K
Street was now firmly established." 36

DeLay's behavior was extreme, and to some, ultimately crimi-
nal. In 1995 the Washington Post reported on a "book" that
[DeLay] kept on a table in the anteroom of his Capitol Hill office,

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Two Conceptions of "Corruption" 237

which listed "friendly" and "unfriendly" companies, industries, and
associations. 37 Lobbyists would use the book to determine whether
DeLay would meet with them — "friendlies," yes; others, no — and
the cheapest way to keep on the right side of that line was cam-
paign cash.

Not all of this behavior by these Republicans was illegal (though
DeLay was convicted of money laundering). 38 Yet it all produced
a kind of systematic corruption. Indeed, so tempting was it to the
Republican leadership to feed this dependency that after coming to
power, the caucus very quickly decided to give up on its stated goal
of shrinking the size of government, so that it could use the power
of majority status to more effectively pursue its goal of securing
control of the government. As Kaiser describes it:

Republicans took over the House Appropriations Committee
determined to cut the government down to size. Their ambi-
tions were soon compromised. Jim Dyer, the staff director of
the committee under Congressman Bob Livingston of Louisiana,
who became chairman of Appropriations in 1995, recalled what
happened. Gingrich initially supported Livingston's efforts to
impose discipline on spending, Dyer recounted, but in the face
of perceived political necessity, the leadership wavered. Cutting
spending was good, but Gingrich, Armey, DeLay, and others
quickly realized that "we have another aspect to our existence
here, which is that we must use the Appropriations Committee
as a resource to protect our vulnerables, because once we got
into power, we wanted to stay in power." 39

In this way, dependence corruption is an enabler for both venal
and systematic corruption. A feeder drug. It makes both venal cor-
ruption easier, and systematic corruption more likely. It does this
by creating conditions that feel normal, or justified, but that breed
both forms of corruption. Knowing that there are members of Con-
gress dependent upon campaign cash, private interests exploit
that dependency, by seeking special benefits from the government
("rents") and returning the favor ever so indirectly with campaign

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238 BEYOND SUSPICION

contributions. And knowing that they are so dependent upon pri-
vate support, members of Congress will work to keep their fingers
in as much of private life as possible, if only to ensure that there
are souls interested in securing sensible regulatory policy (in the
way such policy is secured — through the proper dance of cam-
paign funding). Because this is "just the way things are done," no
one need feel guilty, or evil, by participating in this system. Jack
Abramoff was evil. But a lobbyist arranging a fund-raising event for
a target member of Congress is "just doing his job."

It's this distinction, I believe, that Representative Tony Coelho
(D-Calif; 1979-1989) was trying to draw in what otherwise seems
a bizarrely weird comment. As he told Robert Kaiser, "The press
always tries ... to say that you've been bought out. I don't buy

that I think that the process buys you out. But I don't think that

you individually have been bought out, or that you sell out. I think
there's a big difference there." 40

There is a big difference. Individuals live within a system that
demands certain attentions. Certain sensibilities. As those sensibili-
ties are perfected, the representative begins to function on auto-
matic pilot. And when she bends, she's not bending because of
a particular interest. She's bending because of a process she has
learned, and perfected. As Kaiser puts it, these are "ordinary peo-
ple responding logically to powerful incentives." 41 There's nothing
else to do. It isn't selling out. It is surviving.

Dependence corruption also helps throw into relief a (possible)
blindness in the Supreme Court's recent authority, apparently limit-
ing the reach of campaign funding regulation. That at least was the
implication of the Court's (now-infamous) decision in Citizens
United v. FEC (20\V).

In Citizens United, the Supreme Court held that corporations
had the same right to make independent campaign expenditures
that individuals had. This means corporations have the right to
spend an unlimited amount of money promoting or opposing a
candidate, so long as the expenditures are not coordinated. Not

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Two Conceptions of "Corruption

239

surprisingly, we have seen an explosion in independent expendi-
tures since that decision. Comparing 2010 to the last off-year elec-
tion, spending is up more than 460 percent. 42

INDEPENDENT EXPENDITURES

$300m

$225m

$150m

$75m

1990 1994 1998 2002 2006 2010

FIGURE 14

The Court reached its conclusion not because it held (in this case
at least) that corporations were "persons," and, for that reason, enti-
tled to First Amendment rights. Instead, the opinion hung upon the
limits of the First Amendment. The question, as the Court addressed
it, was whether Congress had the power to limit this kind of politi-
cal speech. 43 The First Amendment says that Congress "shall make
no law. . .abridging the freedom of speech." It doesn't say ". . .the
freedom of speech of persons." As the Court interpreted that right,
it was about what Congress could and couldn't do, not about who
got the benefit of what Congress couldn't do. And Congress, the
Court held, had no power to limit this kind of political speech.

RepublicLost_HCtextFl.indd 239

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240 BEYOND SUSPICION

There is an important kernel of truth in the Supreme Court's
opinion. Congress shouldn't have the power to silence or bur-
den any political speech based upon who or what is uttering it.
Whether the speech is from a person, or a corporation, or a dol-
phin, should be irrelevant: Congress should not be in the business
of balancing or silencing speech of any kind on the basis of some
theory about which speech is to be preferred. 44

And thus, in my view, the corporate speech actually at issue in
the case — a video about Hillary Clinton, produced by a nonprofit
political corporation — should have been free of regulation by the
government. Citizens United, Inc., should, in my view, have had
the liberty to spend whatever corporate funds it had to advance its
own quirky view about why Clinton should not have been presi-
dent. In its result, then, in the precise context of the facts of the
case, the decision was, in my view, correct.

Likewise, in my view, was the Court correct in holding that
Congress shouldn't have the power to suppress speech for the pur-
pose of "equalizing" speech. That was the theory behind Austin v.
Michigan (1990), the case explicitly overruled in Citizens United.
Austin had held that Michigan could ban corporations from using
treasury funds to support or oppose a candidate, finding that such
funds "can unfairly influence elections." 45 That holding had been
read to support the idea that the category of corruption included
both quid pro quo corruption and what we could call inequality
corruption.

But to call inequality corruption is just to create confusion. 46
Inequality in speech may be corruption. But not necessarily. If,
for example, Michigan had banned political organizing by unions,
arguing that unions' power to turn out votes was "unequal" to the
power of other interest groups in the state, that inequality would
have nothing to do with corruption, at least in a system intended
to be dependent upon votes. Regulating it would be improper. The
aim of campaign finance regulation should not be, therefore, in my
view at least, "to level the playing field among interests that vie for
support and attention." 47 Its only aim should be to end corruption.

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Two Conceptions of "Corruption" 241

The Court was therefore right, in my view, to reject the "equal-
ity" conception of corruption. But it was wrong to imply the only
relevant conceptions of corruption are "equality only" and "quid
pro quo" corruption. Justice Kennedy's opinion made it sound as
if the only corruption that Congress could remedy, at least through
regulations on political speech, was type 1, quid pro quo, corrup-
tion. Or, again, that venal corruption is the only legitimate target of
speech-restricting regulation. Systematic corruption is not.

For an originalist, this is bizarre. As Zephyr Teachout's and
J. J. Wallis's work makes clear, the single most important corrup-
tion that the Framers were working to cure was systematic cor-
ruption, not venal corruption. That was the problem that plagued
the English so completely, as "the ability to tie the interests of the
financial community to the policies of the government through
the medium of the national debt and corporate charters allowed
the Crown to extend its influence and undermine the indepen-
dence of Parliament." 48 As J. G. A. Pocock describes it:

The King's ministers were not attacked for sitting in Parlia-
ment, but they were attacked for allegedly filling Parliament
with the recipients of government patronage. For what was uni-
versally acknowledged was that if the members of the legisla-
ture became dependent upon patronage, the legislature would
cease to be independent and the balance of the constitution
would become corrupt. Corruption on an eighteenth-century
tongue — where it was an exceedingly common term — meant
not only venality, but disturbance of the political conditions
necessary to human virtue and freedom. 49

Such "disturbance" occurred when one power had the ability to
weaken the independence of another.

The puzzle for the Framers, then, was not how to police the
perpetual problem within any government — bribery, or quid pro
quo deals. The challenge was to craft a government in which each
department was sufficiently independent to protect itself against

RepublicLost_HCtextFl.indd 241 {g} 8/23/11 1:19:52 AM

242 BEYOND SUSPICION

systematic corruption by another, and to protect the people against
systematic corruption by the government. 50 From that perspective,
the important question is whether we could call deviation from
that dependency "corruption" — at least in the language of the
Supreme Court.

In my view, the answer to this question is obviously yes. Depen-
dence corruption is plainly corruption. It also plainly infects the
political system for the same reasons that quid pro quo corrup-
tion does. In both cases, the consequence of the corruption is to
draw the legislature away from the reasons it should be consider-
ing. With quid pro quo corruption, the effect is to draw attention
to personal and venal reasons. With dependence corruption, the
effect is to draw attention to a competing dependency.

Justice Kennedy's apparent argument for limiting the concept of
corruption to quid pro quo is perhaps best captured in two closely
related passages from Citizens United. First, to the suggestion that
there may be a corruption beyond quid pro quo corruption, tied to
the special influence that money has within our political system,
Justice Kennedy quotes an earlier opinion of his: "Favoritism and
influence are not . . . avoidable in representative politics. It is in the
nature of an elected representative to favor certain policies, and,
by necessary corollary, to favor the voters and contributors who
support those policies." 51

Notice the words and contributors. Without those two words,
Kennedy's statement is certainly true. The claim could be made
even more strongly: favoring the policies that one's constituents
favor is the essence of representative democracy (or at least one
dominant conception of it). It was for the purpose of establishing
precisely this sort of dependency of representatives on constitu-
ents that the Framers created frequent elections in the House.

But by adding the words and contributors, Kennedy makes
the statement not only not obvious, but also, in my view, plainly
wrong. The Framers did not intend to make representatives depen-
dent upon contributors. Representatives were to be dependent
upon voters, or, more generally, "on the People alone." And while it

RepublicLost_HCtextFl.indd 242 {g} 8/23/11 1:19:52 AM

Two Conceptions of "Corruption" 243

is conceivable — assuming many contingencies — that a dependence
upon "contributors" could in effect be the same as a dependence
upon voters, as I've just demonstrated, there is no doubt that under
our current system of campaign finance, there is no such overlap
between the interests of "the People" and "the funders."

This gap between a dependence upon the people and a depen-
dence upon contributors has two effects. One is the distortion in
policy described in chapter 10. To chase funders, you have to do
different tricks from the ones you do to chase voters. Those differ-
ent tricks at least sometimes yield different policies.

The second effect is on the public's trust. The public isn't stu-
pid. It recognizes that the focus of the politician is elsewhere. Every
other year there's lots of screaming at the public, lots of messages
on TV, many of them extremely negative. But once the campaigns
are over — once, as Obama powerfully put it, the "confetti is swept
away. . .and the lobbyists and the special interests move in" 52 — the
focus shifts back to the funders. The public is therefore not unrea-
sonable in believing that it is the funders, not the voters, who call the
shots. The public is not crazy when it loses faith in its democracy.

Justice Kennedy, however, denies this effect on the public's trust.
In a second critical passage from Citizens United, Kennedy writes:

The appearance of influence or access . . . will not cause the
electorate to lose faith in our democracy. By definition, an inde-
pendent expenditure is political speech presented to the elec-
torate that is not coordinated with a candidate The fact that

a corporation, or any other speaker, is willing to spend money
to try to persuade voters presupposes that the people have
the ultimate influence over elected officials. This is inconsis-
tent with any suggestion that the electorate will refuse "to take
part in democratic governance" because of additional political
speech made by a corporation or any other speaker. 53

Notice the nature of this claim. Here, one of our nine lawyers in
chief is making a claim not about the law or about some complex

RepublicLost_HCtextFl.indd 243 {g} 8/23/11 1:19:52 AM

244 BEYOND SUSPICION

legal doctrine that needs the keen legal insight that we presume
our Supreme Court justices to possess. He is instead making a
statement about cause and effect: a representation about facts in
the world. An effect (the voters' losing "faith in our democracy")
won't be produced by the challenged cause ("the appearance of
influence or access"). And as one does for South African president
Thabo Mbeki's statement that HIV doesn't cause AIDS, one wants
to know, upon what authority did the justice make this claim? On
what factual basis did the Court rest this factual judgment?

The answer is none. The Court had no evidence for its assertion.
It didn't even purport to cite any. Instead, Justice Kennedy tried to
negate the suggestion that there could be such a link by invoking
a point of logic: all the money does is to buy campaign advertise-
ment; a campaign "presupposes that the [voters] have the ultimate
influence over elected officials." That logical fact of "ultimate influ-
ence," Kennedy argued, demonstrates the social-psychological fact
that "the electorate [will not] lose faith in our democracy."

I've already addressed the logical gap in this argument in chapter
10: even if the money simply buys political speech, if procuring it or
inspiring it to be spent requires distortion in the work of government,
that distortion is reason enough to be cynical about the government.

Consider now the psychological gap in Kennedy's argument:
Attitudes don't follow logic alone. Or, at least in this case, they need
not follow from the very narrow chain of reasoning highlighted by
the Court. It is perfectly plausible that an individual would look at
our current system and lose faith in that system, even if the system
"presupposes that the voters have the ultimate influence."

The point bears emphasis. Imagine the following political sys-
tem: Every citizen gets to cast a vote to determine which candidate
for Congress gets to be a member of Congress. But the Politburo
or Exxon or George Soros or Glenn Beck (you pick) gets to decide
who will be the candidates for Congress. No doubt, the voters in
this system "have the ultimate influence" over which candidates
get selected. But the voters in this system have no influence over
who the candidates will be.

RepublicLost_HCtextFl.indd 244 {g} 8/23/11 1:19:52 AM

Two Conceptions of "Corruption" 245

No one would say that this system was a democracy just
because voters had "the ultimate influence." For a democracy, as
we understand the term today, must ensure not only an equal vote
at the time of election, but also that no improper or illegitimate or
undemocratic influence sets up who will be the candidates that the
voters "have the ultimate influence over." We all recognize the ille-
gitimacy today of a poll tax. But what about a politicking tax: a tax
that a candidate must pay as a condition of being a candidate. Why
is it wrong to filter voters on the basis of who can pay and who can-
not, but not wrong to filter candidates on the basis of who can pay
and who cannot?

The citizens of this republic are perfectly entitled to have lost
faith in this democracy. Justice Kennedy's lecture in logic to justify
this faith-destroying economy of influence fails as a matter of logic,
and a measure of reality.

If Congress has the power to restrict speech to limit quid pro quo
corruption, and the reasonable appearance of quid pro quo cor-
ruption, it ought, in principle at least, to have the power to restrict
speech to limit dependence corruption as well.

If quid pro quo corruption is regulable because we presume
such bribes distract legislators from their proper focus, on legisla-
tion that serves the public interest, then dependence corruption
raises the same concern, this time at the level of the legislature.

If Congress can regulate to keep individual legislators from
making decisions that are dependent upon venal rather than public
interests, it ought to be free to regulate to keep the legislature as
a whole from making decisions based on improper dependencies.

If it can act to ensure that individual legislators don't act, or
seem to act, on an obviously improper dependency, it ought to be
free to act to ensure that the legislature itself not act, or seem to
act, on a different, but equally improper, dependency. Here is the
place where logic ought to matter. And here, the logic justifying
the one speech restriction justifies the other.

Again, in principle. My claim is not that a law restricting speech

RepublicLost_HCtextFl.indd 245 {g} 8/23/11 1:19:52 AM

246 BEYOND SUSPICION

to protect against dependence corruption is necessarily valid, or
even a good idea. As with any speech regulation, the first question
is whether there are other, less restrictive means of achieving the
same legislative end. So if Congress could avoid dependence cor-
ruption by, say, funding elections publicly, that alternative would
weaken any ability to justify speech restrictions to the same end.
The objective should always be to achieve the legitimate objectives
of the nation without restricting speech. My point is simply that
the legitimate objectives should plainly include what the Framers
thought they had achieved: congressional independence by elimi-
nating dependence corruption.

We know enough to state with confidence what most Americans
have felt in their guts for a very long time: the people can fairly
believe that the core institution of this democracy, Congress, is cor-
rupt. Not in the old-fashioned way. There aren't safes on Capitol
Hill filled with bags of cash. It is instead corrupt in a new and more
virulent way. Zephyr Teachout jokes, "More bribery, less corrup-
tion." There's a deep insight in that clever quip.

We are fair to believe that this corruption blocks Congress from
reforms on the Left and on the Right. It instead cements Congress
to a debilitating status quo. What wins in the market is too often
not what "a free market" would choose, but what a market bent by
tariffs and subsidies and endless incumbency protective regulation
defaults to. Call that "crony capitalism." Our tax system is an abys-
mal inefficient mess not because of idiots at the IRS or on the Joint
Committee on Taxation, but because crony capitalists pay top dol-
lar to distort the system to their benefit. We don't have real finan-
cial reform, because millions have been spent to protect bloated
banks. We don't have real health care reform, because the insur-
ance companies and pharmaceutical companies had the power to
veto any real change to the insanely inefficient status quo.

Adam Smith never defended crony capitalism. Neither did Fried-
rich Hayek, or Milton Friedman, or William F. Buckley, or Barry
Goldwater, or Ronald Reagan. Franklin Delano Roosevelt almost

RepublicLost_HCtextFl.indd 246 {g} 8/23/11 1:19:52 AM

Two Conceptions of "Corruption" 247

did, but he was shaken back to his senses by his own Supreme
Court. And the best of the principles in the New Deal Democratic
Party would have agreed with Smith, Hayek, Friedman, Buckley,
Goldwater, and Reagan: a government in which policy gets sold to
the highest bidder is not long for greatness.

As I write these words, Gallup's latest "confidence in Congress"
poll finds only 11 percent who have confidence in this Congress. 54
Eleven percent. At what point do we declare an institution politi-
cally bankrupt, especially an institution that depends fundamen-
tally upon public trust and confidence to do its work? When the
czar of Russia was ousted by the Bolsheviks, he had the confidence
of more than 11 percent of the Russian people. When Louis XVI
was deposed by the French Revolution, he had the confidence of
more than 11 percent of the French. And when we waged a Revolu-
tionary War against the British Crown, more than 11 percent of the
American people had confidence in King George III.

We all must confront this disease if we're to overcome it. Our
Congress is politically bankrupt. It struts around as if all were
fine, as if it deserved the honor that its auspicious Capitol building
inspires. It acts as if nothing were wrong. As if the people didn't
notice.

We have lost something profoundly important to the future of
this republic. We must find a way to get it back.

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RepublicLost_HCtextFl.indd 248 {g} 8/23/11 1:19:52 AM

PART IV

SOLUTIONS

Our Congress has been corrupted; its independence, weak-
ened. This corruption can be seen from two sides: from the
side of Congress and from the side of the people.

From the side of Congress, the corruption weakens the
focus on the people, as it strengthens the focus on the funders.
As Barry Gold water (R-Ariz.; 1953-1965, 1969-1987) put it:

Senators and representatives, faced incessantly with
the need to raise ever more funds . . . can scarcely avoid
weighing every decision against the question, "How will
this affect my fund-raising? " rather than "How will this
affect the national interest?" 1

From the side of the people, the corruption confirms the
irrelevancy of democracy. We are taught our place. We find
other things to do. We focus on strategies to make us less
dependent upon an entity that is distracted from us. We learn
not to waste our time, because the message these distracted
souls send is, You are not my real concern.

Both sides are bad, but in different ways. Yet we can
respond to both in a similar way: by removing the distraction
that thwarts their independence.

The changes that would accomplish this are not hard to
describe. How we effect them, however, is. The gap in the Fram-
ers' original design is obvious enough. The types of reform that
would fill that gap are obvious as well. But how one motivates
a political response sufficient to fill it is incredibly difficult to

249

RepublicLost_HCtextFl.indd 249 {g} 8/23/11 1:19:52 AM

250 SOLUTIONS

imagine. I am not convinced it is possible, even though the next
chapters map four different strategies we could try. I have my
favorite among these four, but none are probable.

If this change is possible, it will take a series of unprecedented
events. We've only ever seen major reform as the reaction to major
quid pro quo corruption. But as the corruption I've described
here doesn't manifest itself in drama, I am not even sure we could
imagine the event that would inspire the change we need.

Instead, this reform will depend upon equally extraordi-
nary, but much less dramatic, events, moments that defy belief
as a way to focus attention in a way that might affect beliefs.

The first time I recognized such a moment, I was watching
TV. Bill O'Reilly was Jon Stewart's guest on The Daily Show.
As a liberal, my job is to despise O'Reilly. As a former conser-
vative, I find that job harder than it should be. I get that there's
a Star Wars metaphor in this somewhere, but the ambiguity
made me particularly eager to watch a clear hero, Stewart,
tangle with the denouncer of "pinheads," O'Reilly.

Stewart was interviewing O'Reilly about his new book,
Pinheads and Patriots (2011). 2 Midway through the inter-
view, Stewart asked O'Reilly this:

When are we going to come together and deal with the
corruption at the heart of all these problems?

Astonishingly, O'Reilly agreed:

They spend so much time raising money and kissing
butt, they don't even think about problem solving. But
it cuts both ways. The liberal pinheads are just as bad as
the right-wing pinheads.

Rarely — okay, almost never — do these two figures agree
about something. But here was agreement: upon "the corrup-
tion at the heart of all these problems." Corruption. Heart. All
these problems.

As you've already seen, I couldn't say it better myself.

RepublicLost_HCtextFl.indd 250 {g} 8/23/11 1:19:52 AM

CHAPTER 15

Reforms That Won't Reform

ur democracy does not have just one problem that one

V — J single reform would fix. There is a long list of reforms that
we need. I would happily join with others to push for this long
list. But there is a beginning to that list, and we need to be clear
about what that beginning is. In this chapter, I address two reforms
many believe to be sufficient. To be reform enough.
They are not.

The Incompleteness of Transparency

In 1973, regulators at the EPA were struggling with ways to get
Americans to care more about fuel efficiency. In August of that
year the agency published a voluntary protocol for calculating fuel
economy values, and a label format for manufacturers choosing to
display the calculated values. Those protocols have undergone a
number of changes. The most recent version requires a label like
the one in Figure 15. 1

The insight here was brilliant. Give consumers an understand-
able chunk of data and let them use it to regulate their own behav-
ior. Some won't care about the cost of gasoline. They'll ignore the
label. But others will care. And on the margin, their care will push
more car manufacturers to do the thing the EPA wanted: improve
the fuel efficiency of the nation's fleet.

About the same time the EPA was innovating with transparency,
good-government sorts were struggling with ways to get Ameri-
cans to care more about good (as in clean) government. What could

251

RepublicLost_HCtextFl.indd 251

8/23/11 1:19:52 AM

252

SOLUTIONS

oof Fuel Economy and Environment

ES5 Flexible-Fuel Vehicle
B Gasoline-Ethano! (E85)

Fuel Economy

^^■j ^aa^a^ II J| D/"^ 1 Standard pickups range from 10 to 21 MPG.

^^^fc IVIr^J vehicle rates 99 MPGe. Values

I ^^B-afl are based on gasoline and do not reflect

^^■^H performance and ratings based on E85.

I W 17 23 5.3

combined city/hwy city highway gallons per 100 miles

Driving Range

Elhanol (ESS): 310 mile*

you spend

$1,600

more in fuel costs
over 5 years

compared to the
average new vehicle.

Fuel Economy & Greenhouse Gas Rating (tailpipe only) Smog Rating (tailpipe only)

~ B3

This vehicle emits 472 grams CO ; per mile. The best emits grams per mile (tailpipe only). Froducing and
. distil butin-g fuel -a bo .: regies emission i . learn more .at fueleojnorny.gov.

Actual results will vary for many reasons, including driving conditions and how you drive and maintain
your vehicle. The average new vehicle gets 22 MPG and costs $10,250 to fuel over S years. Cost estimates
are based on 15,000 miles per year at $3.00 par gallon. This is a dual fueled automobile. MPGo is miles per
gasoline gallon equivalent. Vehicle emissions are a significant cause of climate change and smog.

fueleconomy.gov

Calculate personalized estimates andccmpare

compare vehicles

FIGURE 15

regulators do to protect democracy from the embarrassment of
corruption? How could they mobilize a public to demand cleaner
government?

Their answer (amending the Federal Election Campaign Act
of 1971) was massive, if largely invalidated (by Buckley v. Valeo
[1976]). But the one part that survived Buckley looked, in principle
at least, a lot like the EPA fuel economy standards: disclosure. Fed-
eral law now required that all political contributions greater than
$200 be recorded and disclosed. More significantly, the informa-
tion disclosed would include whom someone worked for, making
it possible to aggregate contributions on the basis not just of zip
codes, but of industry codes and corporations.

So here's the product of that bit of sunlight, for contributions
to Democratic congressman Mike Capuano, a local hero represent-
ing Cambridge, Massachusetts. To spare a forest, I've simply aggre-
gated the contributions by the firm the contributors worked for. 2

RepubIicL.ost_HCtextFl.indd 252

8/23/11 1:19:52 AM

Reforms That Won't Reform 253

ORGANIZATION

PAC

CITIZENS

TOTAL

($)

Triumvirate Environmental

44,650

Telecommunications Insight Group

40,780

Machinists/Aerospace Workers' Union

30,000

Genzyme Corp.

7,500

15,100

22,600

Feeley & Driscoll

20,700

Eli LillyS Co.

16,000

2,000

18,000

FMR Corp.

10,000

8,750

18,750

Liberty Mutual Insurance

10,000

5,250

15,250

Raytheon Co.

10,000

4,950

14,950

Citigroup Inc.

14,500

Science Research Laboratory Inc.

14,450

Mintz, Levin et al.

13,600

Wilmerhale LLP

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12,800

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Union

10,000

National Education Assn.

9,000

1,450

10,450

American Assn. for Justice

1 n r\r\r\
10,0UU

1U,UUU

Icon Architecture Inc.

10,000

National Assn. of Realtors

10,000

United Transportation Union

10,000

Service Employees International Union

10,000

American Dental Assn.

13,500

Interpublic Group

15,750

ACS Development

9,800

continued

RepublicLost_HCtextFl.indd 253 {»} 8/23/11 1:19:52 AM

254 SOLUTIONS

ORGANIZATION

PAC

CITIZENS

TOTAL

($)

Forest City Enterprises

5,000

4,800

9,800

Nixon Peabody LLP

1,000

8,750

9,750

Roberts, Raheb & Gradler

9,600

IBE Trade

9,600

Sager Foundation

9,600

Merck KGaA

9,500

National Treasury Employees' Union

10,500

Honeywell International

9,500

Harvard University

9,300

DLA Piper

3,000

6,250

9,250

Barletta Construction

9,200

Camb Health Alliance

11,700

J.J. Vaccaro

9,200

Federal Realty Investment Trust

8,900

Cetrulo & Capone

8,900

Dimeo Construction

8,700

Airline Pilots' Assn.

9,500

American Hospital Assn.

7,500

1,000

8,500

Mace arh i icottc Mutual 1 ifa Inciiranro
IVIdbbdLIIUbcLLb IVIUlUdl Lite HlbUldllLc

1 n nnn

I u,uuu

m nnn

I u,uuu

Palmpttn fnrmm
rallllcLLU vjiuuu

8 nnn

O'Npill Athv & Cas.p\i
\j hciii, /-\uiy ix

m 75n

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7 fi^n

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Ml 1 la ILJa 1 1 la LcU llallML UIIIUII

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Brotherhood of Locomotive Engineers

7,500

Amgen Inc.

5,000

2,500

7,500

American College of Emergency

Physicians

7,500

American College of Surgeons

7,500

Carpenters & Joiners Union

7,500

Brown Brothers Harriman & Co.

7,400

Alternate Concepts Inc.

7,400

Edwards, Angell etal.

2,400

4,900

7,300

continued

RepublicLost_HCtextFl.indd 254

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Reforms That Won't Reform 255

ORGANIZATION

PAC

CITIZENS

TOTAL

($)

Scansoft Inc.

7,200

Commonwealth of Massachusetts

7,060

International Assn. of Fire Fighters

7,000

Global Companies

7,000

National Air Traffic Controllers' Assn.

7,000

Sheet Metal Workers' Union

12,000

Textron Inc.

7,000

Beal Co.

5,800

Manulife Financial

6,500

250

6,750

Ads Ventures

6,650

Partners Healthcare

1 Ul LI IL. 1 J 1 ILUI LI ILUI L

15,400

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fi inn

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k nnn

f; nnn

Mot life Inr

1 VI CU II C II 11.

fi nnn

r\ IVI V

n
u

k nnn

D,UUU

k nnn

D,UUU

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k nnn

D,UUU

n
u

k nnn

D,UUU

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IMdllUNdl HbbM. Ul nulllc DUIIUclb

r nnn

n
u

k nnn

Mat'l A<;<;n / 1 n c i iranrp & Finanrial

NC1L 1 r\jjl 1./ IIIjUICIIILC IX 1 lllullLlul

Advisors

6,000

Marty Meehan for Congress Cmte.

6,000

Boeing Co.

6,000

Zipcar Inc.

5,800

BBH & Co.

5,800

Goodwin Procter LLP

b,yoo

c nnn

b,yoo

Comcast Corp.

1,000

5,000

6,000

Century Bank

5,300

Trinity Financial

5,300

CWC Builders

5,300

New England Development

5,300

Winn Development

5,300

Boston University

5,900

continued

RepublicLost_HCtextFl.indd 255 {»} 8/23/11 1:19:52 AM

256 SOLUTIONS

ORGANIZATION

PAC

CITIZENS

TOTAL

($)

AFfOM Tprhnnlnnv (" nrn

1 nnn

IjUUU

4,iUU

Ivcdlllcy, UUMUVdll (x IVILVJcc

n
u

q 1 en

c i en

J, 1 DU

v_ 1 (rU 1 L UMIUM IMdUUMdl RbbM.

J,UUU

n
u

c. nnn

Rart'c RriHnp PAT
Ddl L b DllULjc rMV_

^ nnn

JjUUU

n
u

c. nnn

Ampriran Ontnmptrir A<;<;n

rA 1 1 1 c 1 1 Q 1 1 \J u LU 1 1 1 c 1 1 IV- rA J J 1 1 .

5,000

Ixrivivj LLr

c. nnn

J,UUU

n
u

c. nnn

Ampriran Tnllpnp nf rarrlinlnnv

r\ 1 1 1 C 1 1 l_U 1 1 V-UIICUC Ul V.QI UIUIUUV

5,000

MlllcllLdll RbbM. Ul UlUlupdcUIL

Surgeons

5,000

BRIDGE PAC

5,000

National Rural Letter Carriers' Assn.

5,000

Ocean State PAC

5,000

Maloney Properties

5,000

Marine Engineers Beneficial Assn.

5,000

American Academy of Ophthalmology

5,000

American Council of Life Insurers

3,000

2,000

5,000

Biogen Idee

5,000

Seafarers International Union

5,000

Teamsters' Union

5,000

550

5,500

American Federation of Teachers

5,000

Penguin PAC

5,000

Operating Engineers' Union

10,000

Silk PAC

5,000

Ironworkers' Union

5,000

Laborers' Union

5,000

USA Farm Worker PAC

5,000

National Assn. of Letter Carriers

5,000

National Beer Wholesalers' Assn.

5,000

Donoghue, Barrett & Singal

5,000

Synergy PAC

5,000

United Parcel Service

5,000

RepublicLost_HCtextFl.indd 256

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Reforms That Won't Reform 257
What does this list say?

Many people experience this sort of question the way they'd
experience the formalities of an eighteenth-century ball: eager to
avoid embarrassment, because they believe there must be insight
or wisdom here. But put your humility aside for a second: What
are these data telling us? We see contributions from employees of
UPS. But we also see contributions from the Teamsters. We can say
unions support the congressman. But we can also wonder why the
lawyers do. The sheer volume seems to scream, "There's something
here to see!" But the more we look, the less we understand. The
more we study, the more questions get raised.

There's a fundamental difference between the EPA sticker and
the product of the FEC: the one conveys information in a usable
manner; the other conveys facts that are often likely to confuse.
The one helps us make decisions; the other leaves us more uncer-
tain. The one says something; the other cannot. In an economy in
which members of Congress must raise millions to keep their jobs,
a perfect record of those contributions tells us both too little and
too much. Too much because we're as likely to jump from some
stray fact to a conclusion it can't support ("He took money from the
banks; he must be bought by the banks"). Too little because if the
real action is in the relationship between the funders and the lob-
byists, then the mere fact of a contribution doesn't reveal that real
action. A donation of $2,500 given by an executive on his own, out-
side of a relationship with a lobbyist, means something completely
different from $2,500 given by an executive as part of a campaign
directed by a lobbyist to secure support for a congressman just as
he's considering what to do about a particular bill.

This incompleteness doesn't mean that transparency rules
should be abolished. Of course they should not. Having a record
of contributions is critically important to avoiding more grotesque
forms of corruption. And no doubt, given the astonishing drop in
disclosure by "independent" entities participating in political cam-
paigns, Congress should certainly work quickly to close the disclo-

RepublicLost_HCtextFl.indd 257 {g} 8/23/11 1:19:52 AM

258 SOLUTIONS

sure gap. (In 2004, 97.9 percent of groups making electioneering
communications disclosed their donors; in 2010, 34 percent did.) 3

But a detailed record of contributions in a system that depends
fundamentally upon an endless stream of contributions will not on
its own produce the reform we need. It will not secure congressio-
nal independence.

For, perversely, the system simply normalizes dependence rather
than enabling independence. There's no shame in the dance. There's
no embarrassment from being on the list. There is instead an end-
less stream of "gotcha" journalism linking a decision to a contribu-
tor, with almost no integrity on either side. That "gotcha" in turn
feeds the already profound cynicism that Americans have. Like
snippets of flirtation between a significant other and someone else,
they fuel emotion, not understanding. Passion, not truth.

And then there's another, more fundamental problem with rely-
ing upon transparency alone: transparency assumes that the influ-
ence in the system comes with the gift. That if you want to know
how much Company X influenced Congressman Y, you need only
look at the contributions of X to Y (by employees of X, or through
independent expenditures of X to support Y).

But as economists Marcos Chamon and Ethan Kaplan argued
in a paper titled "The Iceberg Theory of Campaign Contributions,"
the influence from campaign contributions may well be indepen-
dent of the amount actually spent. Instead, the influence on any
particular candidate, they maintain, could also depend on the cred-
ible threat of expenditures to benefit the candidate's opponent. 4

The effect on the incentives of a candidate, for example, of a
$10,000 contribution to the candidate could be the equivalent to
the effect on incentives from a $2,000 contribution to that same
candidate, if the $2,000 contribution were bundled with a credible
threat to contribute $8,000 to the candidate's opponent. The threat
creates its own incentive. The more credible the threat, the greater
the incentive.

Threats, however, are not reported on any campaign disclosure
form. In the example just given, the $2,000 contribution would be

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Reforms That Won't Reform

259

reported; the $8,000 threat would not. The $2,000 is thus the vis-
ible tip of the iceberg, while the $8,000 is the bulk, hidden from
the public's view.

This dynamic was confirmed to me by former senator Larry
Pressler (R-S.D.). "By pouring money into the opponent's coffers,"
Pressler explained, "it is a signal that there could be more." For
example,

National Public Radio has a lot of financial supporters — very
major wealthy people. I was also a supporter, but I thought they
needed to reform some of their internal things. But whenever
I would try to do something about that, all of a sudden contri-
butions would show up in my potential opponent's campaign.
NPR is a very powerful organization. They don't give money
themselves, but they have a lot of very wealthy supporters. And
somehow, miraculously, that money shows up. It is a clear sig-
nal, and the message is received. 5

Chamon and Kaplan wrote in the pre-Citizens United world,
where the maximum "corporate contribution" through a corpo-
rate PAC was $5,000 per cycle. The significance of their insight in
a post-Citizens United world, however, is much greater. For the
power of a potential threat is limited by the maximum contribution
allowed. After Citizens United, limits on independent expendi-
tures are removed. And while the threats must still be indepen-
dent, there are many ways that corporate wealth can be translated
into significant political influence that would never be revealed by
any system of disclosure alone. Indeed, as a poll of Hill staffers in
2011 reveals, this has been precisely the effect. 6

Imagine again, for example, that Bexxon let it be known that it
was willing to spend up to $1 million in any congressional district
to elect representatives who were skeptical of global warming sci-
ence. Or imagine that Moogle let it be known that it would run
up to $1 million in online ads to defeat global warming skeptics.
Neither position would necessarily be "coordination" sufficient to

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260

SOLUTIONS

render the expenditures non-independent: both announcements
could be made well before candidates were even chosen by par-
ties. Yet, if the iceberg theory is correct, in neither case would all
the money have to be spent in order to have its intended effect.
Moogle might actually spend only $1,000, and it might report that
amount. But its influence would be far beyond what it reported, so
long as its threat was credible.

The point is that transparency is being asked to carry too much
weight in this reform fight. It is being depended upon to do too
much. Not only does the "information" revealed not necessarily
inform, but the most important influences in the system would not
necessarily be revealed. No doubt, an efficient system will show
us lots that will concern many. In this, it functions as the Webcam
on the Deepwater Horizon functioned: displaying in graphic detail
the sludge being dumped into the Gulf. But as with the Deepwater
Horizon, the solution is not a better camera. It is a regime that stops

That's the commitment those dedicated to transparency must
make. If the problem we face is the inevitable distortion that
dependence corruption produces, we need to focus on ways to
end that corruption. Seeing it more clearly, as the brilliant souls at
the Sunlight Foundation and MapLight make possible, is necessary.
Their work has certainly motivated many (including me), and will
certainly motivate more. But if seeing it is all that we do, then it is
just as likely to drive many more of us over the brink of cynicism.
"You've shown me clearly now what I already believed. Now I'm
even more certain that there's no reason for me to be here." But
as San Francisco supervisor Harvey Milk said, "You gotta give 'em
hope." A perpetual stream of political muck made transparent is
not hope.

The (Practical) Ineffectiveness of Anonymity

The incompleteness of transparency has led some to suggest its oppo-
site: anonymity. If the core problem with money in a democracy is

the sludge.

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Reforms That Won't Reform 261

the risk of corruption, whether in the crude quid pro quo form or
the more subtle dance of a gift economy, then maybe the simplest
way to solve that corruption is to make all donations anonymous to
the members as well as the public. Obviously, laws banning quid
pro quo corruption need to remain, but if we could make it impos-
sible (or really, really difficult) for a member to know who gave his
campaign what, we would make it impossible for the member to
give favors in exchange for the gifts that have been given.

Put aside for a moment the obvious question — how could you
ever really make a donation anonymous to the recipient? — so that
the contours of this ingenious solution are clear. If the problem
with money in politics is that the money will bend policies, this
requires that the politicians know something about who their
money comes from. Add anonymity, and that essential condition
gets removed. Remove that essential condition, and it just could not
be true that "money buys results."

The inspiration for this idea comes from the nineteenth centu-
ry's solution to a similar problem with money in politics: vote buy-
ing. Until the late nineteenth century, voting was public: a voter
would openly and publicly cast his (and it was just his) ballot. That
publicity was thought to be an essential part of the integrity of the
vote. It may have been, but publicity was also an essential element
to vote buying, a very common practice in nineteenth-century
democracy. 7 Because I can see exactly how you vote, you can easily
sell your vote to me.

Enter anonymous voting, which made it impossible legally for
me to be confident about how you, the voter, votes. No doubt, you
could promise me that you'll vote as I wish, but you could just as
well promise the same thing to the other side. The price I'd be will-
ing to pay, then, for your vote is much, much less (discounted for
the possibility that you've also sold your vote to the other side).
And by lowering the price, this ingenious reform lowered the sig-
nificance of vote buying substantially.

That's the same intuition behind anonymity in contributions.
Sure, I could tell you that I contributed $10,000 to your campaign.

RepublicLost_HCtextFl.indd 261 {g} 8/23/11 1:19:52 AM

262 SOLUTIONS

But if you couldn't be sure, there wouldn't be much reason for
you to respond. My incentive to give would thus be weakened
substantially — at least if the motive of my gift were to buy a par-
ticular result. That decline in incentives would thus weaken the
market for buying policy.

Professors Bruce Ackerman and Ian Ayres have done the most
to describe this system, and in describing it, they have developed
an elaborate system for protecting this anonymity. 8 The two criti-
cal elements are, first, an anonymous donation booth, which takes
in contributions and then divides those contributions into random
amounts, which it then passes along to the candidates; and two, the
right to revoke any contribution once made. It is this second ele-
ment that does most of the work: for even if you watched me make
the contribution to your campaign, I would still have an opportu-
nity to revoke that contribution the next day. Once again, you're
free to trust me when I say I haven't revoked it. But just as with vote
buying, the need for trust will severely weaken the market.

The Ackerman/Ayres solution is ingenious. Indeed, its biggest
danger is that it might work too well: without substantial public
funding, it could severely limit the amount of money contributed
to campaigns, at least if the contributions were for the purpose of
influencing legislation. (This was the result from one well-known
example with anonymous contributions to judicial elections in
Florida. 9 Once contributions were made anonymous, contributions
dried up.)

My concern with this solution is not whether it would actually
work. It would, in my view, for the architecture is genius. My con-
cern instead is about whether it would be perceived to work. For,
if the core problem that dependence corruption creates is the per-
ception among voters that "money buys results in Congress," then
fighting that perception requires a system that the voters would
understand, and believe. Yet we live in a nation where people don't
even believe that voting machines are counting ballots accurately.
To imagine the public understanding the brilliance of the anony-
mous donation booth, and believing that, in fact, there is no way

RepublicLost_HCtextFl.indd 262 {g} 8/23/11 1:19:52 AM

Reforms That Won't Reform

263

for large contributors to prove they've made (and haven't revoked)
a contribution, is, I believe, unrealistic. The mechanics are too com-
plex; the sources of suspicion are too great. Even serious scholars
criticizing the plan haven't grasped its basic mechanics. To expect
more from the average American is to expect too much.

That's not to say it shouldn't be tried; it should. It's not to say we
shouldn't see whether the mechanism could be clearly explained;
we should. But the change here is huge, and the gamble even bigger.

There is a smaller change that we could make with a larger
potential payoff.

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CHAPTER 16

Reforms That Would Reform

If the independence of our Congress has been weakened — if the
intended dependence "upon the People alone" has been com-
promised by a competing dependence upon the funders — the solu-
tion to this corruption is to end the compromise. The simplest way
to do that would be to make "the funders" "the People." A reform,
in other words, that reduces the gap between "the funders" and
"the People," so that none could believe that the actual influence
of the one was substantially different from the intended influence
of the other. Substantially different. No system is going to elimi-
nate the gap completely. But as Robert Brooks commented more
than a century ago, "under a system of small contributions from a
large number of people, it would matter little even if some of the
contributors were not wholly disinterested." 1

Over the past fifteen years, three states have experimented with
reforms that come very close to this idea. Arizona, Maine, and Con-
necticut have all adopted reforms for their own state government
that permits members of the legislature (and of some statewide
offices) to fund their campaigns through small-dollar contributions
only. Though the details of these programs are different, the basic
structure of all three is the same: candidates qualify by raising a
large number of small contributions; once qualified, the candidates
receive funding from the state to run their campaigns.

Arizona, Maine, and Connecticut are very different states —
politically, demographically, and culturally. But despite their differ-
ences, these "clean money," or "voter-owned," elections have had
important success. Candidates opting into these public funding

264

RepublicLost_HCtextFl.indd 264 {g} 8/23/11 1:19:52 AM

Reforms That Would Reform 265

systems spend more time talking to voters than to funders. They
represent a broader range of citizens than the candidates who run
with private money alone. And they have succeeded in increasing
the competitiveness of state legislative elections, making incum-
bents if not more vulnerable, then at least more attentive. 2

If America were to adopt any one of these programs to fund
elections in Congress, it would be an enormous improvement over
the current system. But I believe we can do even better. These bold
and important experiments have taught us something about what
works, and what doesn't. They have also made salient the sources
of key opposition. 3

The principal objections to these state programs are two. First,
any system that selected a fixed funding amount per legislative dis-
trict would be attacked as either arbitrary, too generous, or not gen-
erous enough. I share the anxiety of many with any system in which
bureaucrats pick the amount of money available to candidates within
an election. Elections should be free of that potential for abuse.

Second, some are troubled with the idea of "their money" being
used to fund political speech that they oppose. This is not a con-
cern of mine, but I do respect the concern and understand it.

We can solve both of these problems within the architecture
of small-dollar-funded elections. In the balance of this chapter, I
describe how. 4

The Grant and Franklin Project

Assume with me that every voter in America produces at least fifty
dollars in revenue to the U.S. Treasury. Ninety percent of Ameri-
cans pay some tax revenue to the federal government. 5 And we can
assume the percentage of voters who pay some tax revenue is even
higher.

Given this assumption, consider the outline of a system to
finance political campaigns that would not produce the cynicism
that stains the current system:

RepublicLost_HCtextFl.indd 265 {g} 8/23/11 1:19:52 AM

266 SOLUTIONS

First, we convert the first fifty dollars that each of us contrib-
utes to the federal Treasury into a voucher. Call it a "democracy
voucher." Each voter is free to allocate his or her democracy
voucher as he or she wishes. Maybe fifty dollars to a single candi-
date. Maybe twenty-five dollars each to two candidates. Maybe ten
dollars each to five candidates. 6 The only requirement is that the
candidate receiving the voucher must opt into the system.

Second, if the democracy voucher is not allocated, then it goes
to the political party to which the voter is registered. If the voter is
not registered to a party, then it goes to supplement funding for the
infrastructure of democracy: voting systems, voter education, and
the Grant and Franklin Project.

Third, voters are free under this system to supplement the
voucher contribution with their own contribution — up to $100 per
candidate. One hundred dollars is nothing ... to about 2 percent of
the American public. It is a great deal of money to everyone else.

Fourth, and finally, any viable candidate for Congress could
receive these contributions if he or she agreed to one important
condition: that the only money that candidate accepted to fund
his or her campaign would be democracy vouchers and contribu-
tions from individuals of up to $100 per citizen. That means no PAC
money and no direct contributions from political parties. The only
external funds such a campaign would receive would be democ-
racy vouchers plus, at most, one Ben Franklin per citizen.

There are a bunch of ways to tinker with the elements to this
design. We could (and, in my view, should) increase the voucher
amount and add the presidency. I've excluded that office for now,
but no reform would be complete without it. We could also add
the ability of political parties to contribute. I'd be for that — political
parties are critically important stabilizing and energizing tools for
democracy — but I've left them out for the moment (partly because
they add an important complication: How would you create a vol-
untary limit to the amount each individual gave to a political party
and avoid that being channeled improperly to the candidates?). Like-
wise, we could limit the voucher contributions to candidates within

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Reforms That Would Reform 267

your own district. (Wisconsin did this at the end of the nineteenth
century.) 7 That, too, may make more sense of the project to reinforce
constituent dependencies. But this, too, I've left out for the moment,
again for the purposes of keeping the idea simple and clear.

This design has a number of essential features:

First, it is voluntary. Candidates opt into the system, just as
presidential candidates have (or have not) opted into the existing
system to fund presidential campaigns. By making it voluntary, we
avoid an almost certain invalidation by the Supreme Court on the
basis of Buckley. Contribution limits, the Court said, are fine, so
long as the limit is related to a reasonable perception of quid pro
quo corruption. 8 But $100 would be too low a limit for this Court.

Second, unlike practically every other plan to fund political
campaigns publicly, this plan does not allow "your money" to be
used to support speech you don't believe in. The money that gets
allocated here is money tied to you. It's the "first fifty dollars" you
send to the federal Treasury. Whether through income tax, or gas
tax, or cigarette tax — it doesn't matter. You caused the money to
enter the federal system. You get to allocate it to whomever you
wish. Others will allocate their money differently. But no one will
be able to complain that his money is being used to pay for political
speech he doesn't believe in.

Third, unlike most systems to fund publicly political cam-
paigns, this system permits contributions in addition to the public
funds. If the Obama campaign taught us anything, it taught us the
importance of allowing citizens to have skin in the game. If you
choose to give a candidate $100 rather than spending that money
on designer jeans, that says something about your commitment to
the candidate. It binds you to his campaign much more strongly
than if you simply said you supported him, or allocated your (oth-
erwise unusable) democracy vouchers to him. This is the brilliant
insight in Spencer Overton's analysis of the "Participation Interest"
in campaigns. 9 Give something and you get committed.

Fourth, unlike most systems to fund political campaigns pub-
licly, this one would inject an enormous amount of money into

RepublicLost_HCtextFl.indd 267 {g} 8/23/11 1:19:52 AM

268 SOLUTIONS

the system. If every registered voter participated in this system, it
would produce at least $6 billion in campaign funds per election
cycle ($3 billion a year). Some portion of that would flow to candi-
dates. The balance would flow to political parties. In 2010 the total
amount raised and spent in all congressional elections was $1.8 bil-
lion. The total amount contributed to the two major political par-
ties was $2.8 billion. Compare: Within a reasonable range, we can
be confident the new system has a shot at being competitive with
the existing one. As a candidate, you would not have to starve to be
good. Or, more controversially, you could be good and still do well.

Now, put aside a million questions for the moment and focus
on the single most important thing this system would buy: if a sub-
stantial number of candidates opted into this system, then no one
could believe that money was buying results.

Subject to one critical assumption, which I will return to shortly,
if enough representatives were elected under this system, then
whenever Congress did something stupid, it would be because
there were more Democrats than Republicans, or more Republi-
cans than Democrats, or more pinheads than patriots. But what-
ever the reason, it would not be because of the money. No sane
soul could believe that special-interest money was driving a result.
Every sane soul could instead believe that the mistakes were demo-
cratic mistakes, correctable through a democratic response. This
system builds a treadmill that gets politicians to worry first about
what we, the voters, want. The politician gets on this treadmill the
first moment she decides to run for office. From that moment until
the election, she is collecting the votes (as in campaign funds) that
she needs to wage an effective campaign. And on Election Day, she
collects, or so she hopes, the votes she needs to win. Her primary
focus is on the source of those votes: the people of her district, not
the special interests.

This reform is the key to everything else that follows. Regard-
less of what you believe America's most important problems are,
you need to see this as the first problem that needs to be solved.

RepublicLost_HCtextFl.indd 268 {g} 8/23/11 1:19:52 AM

Reforms That Would Reform 269

But, you say, $6 billion? That's a lot of money, isn't it? Can we
afford it?

It is. For you and for me. For the republic, it certainly isn't, for
two reasons.

First, if it has its intended effect, this reform will make it possi-
ble for us to spend many times less than $3 billion a year. Take just
one example: In 2009, the Cato Institute estimated that the U.S.
Congress spent $90 billion on "corporate welfare." Corporate wel-
fare, as they defined it, was "subsidies and regulatory protections
that lawmakers confer on certain businesses and industries." 10

We have corporate welfare largely because we have privately
funded elections. The "welfare" is the payback, indirect and legal,
but payback nonetheless.

So let's imagine we could eliminate just 5 percent of that pay-
back, by eliminating the need to pay anyone anything, since elec-
tions are no longer funded by large private contributions. Five
percent of $90 billion a year is $9 billion an election cycle — more
than the $6 billion needed to fund the system every election cycle.
Here is an investment that would easily repay itself.

Second, $3 billion a year isn't a lot if it gives us even just a
20 percent chance of fixing our democracy.

For just think about how much we spend every year to "sup-
port democracy" around the world. Some of that spending (a small
part) is direct. Much more of that spending (a huge part) is indi-
rect. We've waged the longest war in American history to "make
democracy possible in Iraq." The total cost of that war? More than
$750 billion. And that's just the money. Put aside the 4,500 patriots
who have given their lives to that theory of democracy building.

If we're willing to spend $750 billion (so far) to make democ-
racy in Iraq possible, we should be willing to spend one-twenty-
fifth of that to make democracy in America work.

Will it work? We don't see lots of evidence that trust in govern-
ment increases when politicians adopt campaign finance reform.
Why would this be any different?

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270 SOLUTIONS

It is fair to be skeptical about any reform working here. As Nate
Persily and Kelli Lammie have demonstrated, 11 we have little actual
evidence to support the idea that cleaning up elections increases
the public's trust.

It is also fair to be skeptical about whether Persily and Lam-
mie's results generalize to every type of campaign finance reform.
After all, none of the changes in the system for financing federal
elections have changed the underlying (and corrupting) economy
of influence. Indeed, the most prominent (transparency) has just
made it more prominent. It is therefore not surprising that trust
doesn't rise when these changes are made. These changes are dif-
ferent, however, from the changes of the Grant and Franklin Proj-
ect. It alone would change the economy of influence of elections
and give the people a reason to think differently.

But what's to stop the bundling of the democracy vouchers
just as contributions are bundled today? And if they were bundled,
wouldn't we still have the same problem we have today?

In a word, no. The problem with American democracy is not
that people try to aggregate their influence. It is that the influence
they aggregate is so wildly disproportionate to the influence the
system intended — votes. If a bundler succeeded in pulling together
one hundred thousand souls to contribute their vouchers to a par-
ticular candidate, no doubt that bundler would have some impor-
tant influence. But her influence is a better proxy for "the People"
she has inspired than is the proxy of the bundler who today col-
lects $5 million from a handful of wealthy, connected souls. Better,
not perfect. But my bet is that it would be better enough.

Which leads to the final important qualification, or what I called
before the "one critical assumption ":

The history of campaign finance reform is water running down
a hill. No matter how you reform, the water seems to find its way
around the obstacle. Block large contributions from individuals,
and they become soft contributions to parties. Block soft contribu-
tions to parties, they become bundled contributions coordinated
through lobbyists. And on it goes. In each case, a brilliant reform

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Reforms That Would Reform 271

has been defeated by some new clever technique to ensure that
money continues to have more salience in our political system than
votes. 12 As Robert Brooks wrote a century ago, "it must be admit-
ted that the ablest corruptionists sometimes show skill little short
of genius in devising new schemes to avoid the pitfalls of existing
law." 13

It would be hubris to pretend that there is any single and final
solution to this problem. I don't make that assumption here. I do
believe, however, that the architecture of this solution is better
than the architecture of most of the solutions offered during the
past forty years, all of which depended upon either silencing, limit-
ing, or dampening someone's desire to speak.

This one doesn't. The Grant and Franklin Project doesn't forbid
anyone from running their own ads. It doesn't force any candidate
into the system. It doesn't stop the likes of Citizens United, Inc.,
from selling videos attacking anyone. This is not a solution that
says speak less. It is a solution that would, if adopted, allow people
to speak more.

Yet in that may lie its Achilles' heel. For, as I've already remarked,
the effect of the Supreme Court's decision in Citizens United has
been to encourage a massive growth in "independent" political
expenditures — with "independent" in quotes because whether
they are indeed independent or, just as important, whether they
are perceived to be independent is an open question. And indeed,
even with 100 percent participation in the Grant and Franklin Proj-
ect, it is conceivable that these "independent" expenditures would
simply evolve into another kind of dependency. Rather than obses-
sively focusing on how to raise campaign funds, the candidates in
this new system would be obsessively focusing on how to ensure
the right kind of "independent expenditures" by very powerful
special interests. The candidates would smile and tell us all that
their campaigns were funded by clean contributions only. And
that would be true. But all the dirty work in the campaigns would
be done by "Americans for a United Future" or "Veterans Against
Feline Abuse" or "United We Stand Forever" or whatever. On the

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272 SOLUTIONS

margin, these independent campaigns would determine who won
and who lost. And as the margin is the game, this world enabled by
Citizens United could well defeat all of the independence that the
Grant and Franklin Project was meant to buy.

In my view, Congress should have the power to regulate against
this sort of dependency as well. But if the Supreme Court sticks to
its (indefensibly narrow) view of what corruption is, then even if we
win this battle for funding reform, we could still lose the larger war.
For the numbers here are quite staggering: Remember the $6 bil-
lion? If the Fortune 400 spent just 1 percent of their 2008 profits
on "independent" political expenditures, that would be more than
$6 billion. Or, put differently, just 1 percent of corporate profits
could defeat the independence this system was meant to buy.

Even if this is true, however, it doesn't change the essential first
step in a strategy for reform. It may well be that we need consti-
tutional reform to ensure congressional independence. But if we
do, we need first to build a constituency for congressional inde-
pendence. Right now we have no such constituency. Right now
there are few clean-money candidates in Congress. And until the
time that a majority of our candidates are clean, we won't have the
political strength to make that constitutional change.

So, again: I am not promising that ending the addiction brings
with it an end to all the troubles that confront this democracy. I am
only insisting that ending the addiction is the first step to address-
ing those troubles.

There are details galore to work out. There are comparisons to
make and lessons to learn. But, for now, my aim is to talk strat-
egy. If you believe, as I do, that our Congress is corrupted; if you
believe that corruption can be solved only by removing its source;
and if you believe that at least some version of a small-dollar cam-
paign system is the essential first step to removing corruption at its
source, how could we do it? What steps can we take? What is the
strategy that makes this revolution possible?

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CHAPTER 17

Strategy 1

The Conventional Game

'he first steps to a cure could be made by simple statute. One
vote in each House of Congress, a signature by a president,

and a bill that would radically remake the economy of influence
that is D.C. could be passed. No changes to the Constitution would
be necessary. No insanely large commitment of funds from the

weekend at the Pentagon, we could create a workable system
where "the funders" were "the People."

The House of Representatives came close to passing such a bill
in the fall of 2010: the Fair Elections Now Act. That bill would have
allowed candidates to opt into a system that limited contributions
to $100 per citizen, matched, after the candidate qualified, four to
one by the government.

This bill isn't my favorite design. But it is close to the design of
the program in Connecticut, Maine, and Arizona, and those states
have demonstrated the great value of "clean," or "voter-owned,"
elections. Even if not perfect, the bill would have been a critically
important change. And if we could get so close in the House, maybe
we don't need anything really fancy here. Maybe some letters to the
editor, and some pressure on congressmen to sign up. If this single
bill could really change D.C, why point attention anywhere else?

If I thought there were a chance we could get this bill passed in
both Houses of Congress, I'd put all my worrying about the details
of the bill aside and push for it.

Treasury required. For about the amount of money we spend every

273

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274 SOLUTIONS

But there are a number of reasons to be skeptical about this
possibility — the first, and most important: Why was it so close to
passing in the House?

The answer in part is because it was so certain not to pass in the
Senate. There are many who supported the bill who would have
thought twice if they actually believed it was going to pass. To be
on the side of clean elections is valuable, in some districts at least,
with some constituencies. There's no doubt that it pays, at least
there, to be seen on the side of reform.

It's another matter entirely, however, to imagine actually living
under that system of reform. The one thing every incumbent has
done under the current system is win. The one thing no incumbent
can be certain of is that he can win under a radically different sys-
tem. It is very unlikely congressmen are going to want to give this
up, voluntarily.

Moreover, as I've already described, the devil they know is not
the only thing they would have to give up. The existing system for
many members of Congress is just a stepping stone, not to higher
political office, but to a lobbying firm. At least some now see their
six or eight years in Congress as the apprenticeship for the real job
coming later. Not all members of Congress, or even most — but I
do think that almost all members are uncertain about what their
future will be, and almost all of them are therefore keen to keep
their options open.

Likewise, and again, as I've already described, a radical change
in the way campaigns get funded would mean an even more rad-
ical change in the business of fund-raising. That, in turn, would
eliminate many of the cushy write-offs members now get as they
flail about trying to raise campaign funds. Many who now support
the legislation would think twice about whether to enact it when
they recognized its most significant consequence for them would
be that they would have to live on the salary of a first-year lawyer in
a Wall Street firm.

Finally, let's not forget the elephant in the room. There is a pro-
fessional class of policy manipulators in this picture. They're called

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Strategy I 275

lobbyists. A very large percentage of those lobbyists are going to
recognize that if elections were funded by citizens, and not by the
funds they channel to candidates, their power, and therefore their
wealth, would collapse.

These professional policy manipulators will have an over-
whelming interest in stopping this legislation. And while there is
only one way to pass a bill, there are a million ways to block it. We
can count on these manipulators using every weapon they have to
block this bill. Why wouldn't they? Wouldn't you, if you saw that
the total value of your industry were about to collapse?

These four reasons all point to a common lesson in the history
of warfare: You don't beat the British by lining up in red coats and
marching on their lines, as they would on you. You beat them by
adopting a strategy they've never met, or never played. The forces
that would block this bill work well and effectively on Capitol Hill,
and inside the Beltway. That is their home. And if we're going to
seize their home, and dismantle it, we need a strategy that they're
sure is going to fail.

Yet we need it to win.

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CHAPTER 18

Strategy 2

An Unconventional (Primary) Game

We need a bit of peaceful terrorism. No guns. No bombs. No
hijacked airplanes. Instead, peaceful, legal action that terri-
fies the enemy. We know who the enemy is. They live within the
Beltway. They depend upon the status quo. We need to give them a
reason to flee the status quo that is more compelling than the com-
fort of things as they are.

The single most terrifying idea for an incumbent is a primary
challenge. As I described in chapter 9, the vast majority of seats
in Congress are safe seats. Safe seats mean the general election is
just a coronation. And so, too, the primary: well-disciplined par-
ties teach young and up-and-coming candidates not to rock the pri-
mary boat. Wait your turn, and you'll get a turn. Step out of line,
and a thin red or blue line will keep you out.

Peaceful terrorism would disturb this comfortable pattern. It
would produce primary challenges. But not by other politicians.
Instead, by citizen politicians: candidates who affirmatively state
that their purpose is not to become a politician. Their purpose
instead is to push an incumbent to do the right thing.

Now, that idea alone won't go far. Local challenges by people
who expect to draw 10 percent (if lucky) from an incumbent aren't
exactly newsworthy. But an interesting loophole in the Constitu-
tion as written does provide a very interesting news hook, and a
chance to rally a much larger force. 1

Here's a quiz: What's required to be elected to the House of

276

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Strategy 2 277

Representatives? You'd think that one requirement is that you be a
resident of the district from which you're to be elected. In fact that
is not true. All the Constitution requires is that at the time of the
election, you "be an Inhabitant of that State in which [you] shall be
chosen." That means you could live in San Francisco, but run for
Congress in LA. Or run in LA, and in San Francisco. And in Oakland
and Sacramento and Eureka.

You get the idea. There's nothing in the Constitution that for-
bids a single candidate from running in multiple districts at the
same time. Of course, she couldn't become the congresswoman
from multiple districts. But her candidacy could be waged in mul-
tiple districts at the same time, all under a single, clear platform:
that she (and the others who are doing the same) will remain in
the race so long as the incumbent does not commit publicly to sup-
porting citizen-owned elections.

To make this work, the supercandidate must be a certain kind
of soul. She must be a prominent, well-liked leading citizen from
the state who is, again, and this is important, not a politician.
Indeed, the party organizing and supporting these peaceful ter-
rorists must demand that the candidates affirm that they have no
intention to run for office again for at least five years, except in
this supercandidate role. To be credible, this must be seen as the
act of a disinterested citizen whose only objective is to change the
system for others. Not the objective of becoming a congressman or
other politician. Like a juror called into service for a limited time,
these supercandidates would be called into service for a limited
time, with a promise to go home.

But if, across key states, this movement could organize a handful
of prominent souls to join in this challenge candidacy — business-
people, scientists, former presidents of universities, even lawyers —
then the protest could begin to resonate. In the first round in 2012,
in the early primaries, the campaign could target a handful of dis-
tricts where incumbents had not committed to citizen-owned elec-
tions. Those candidates could all leverage their candidacy off of a
common and free set of Internet resources. The districts would be

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278 SOLUTIONS

selected on the basis of which were most likely to produce a result.
Producing a result early on would feed more candidates in more
districts later in the primaries. And then once the primaries were
over, the campaign could shift to the general election: targeting
seats that were not safe, where even a single point could flip the
seat from one party to the other.

The advantage of this system is the advantage of all terrorism,
good and evil. Incumbents are deeply risk-averse. They are quick to
position themselves to avoid a fight. And so if this campaign could
launch in a convincing and transparent way, many would shape-
shift. They would position themselves in a manner that avoided
any potential challenge. Much of this peaceful war could be fought
before even a single virtual shot was fired.

The advantage, too, is that this may be the most effective tech-
nique against the so far least-engaged party in this debate, the
grass-roots Republicans. Citizen-owned elections are an extremely
popular idea among both grass-roots Republicans and Democrats.
Indeed, in a number of polls I've seen, the idea is more popular
among Republicans than among Democrats. That's because, for
many Republicans, the idea of special-interest influence is the
corrupting force in government today. Everything they complain
about is tied to that idea.

Beltway Republicans are different of course. The party of Tom
DeLay had to make some pretty awful deals with the devil in order
to raise the money they needed to win. They've developed a fairly
complicated, cognitively dissonant account that justifies selling
government to the highest bidder.

Outside the Beltway, citizen Republicans aren't similarly bur-
dened. Citizen Republicans care about the ideals of the party.
And those ideals resonate well with the objective of removing the
influence of cash in political campaigns. Citizen Republicans iden-
tify with those who attack systematic corruption — government
that organizes itself to hand out favors to the privileged so as to
strengthen its own power. Just such large-scale corruption is pre-
cisely the evil that small-government Republicans seek to fight.

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Strategy 2

279

Thus, these peaceful terrorist candidates in Republican pri-
maries could help break the partisan logjam that has blocked this
reform from moving in Washington. Just a few victories may be
enough to move the leadership of the GOP to a more principled
position.

Critical to this strategy is that while these campaigns are waged
in partisan primaries and, in some cases, as a third party in a gen-
eral election, the platform for this campaign must stand beyond
partisanship. Everyone within this peaceful terrorist conspiracy
must sign on to the same basic principles. To leverage the cam-
paign effectively, everyone must point back to the same basic prin-
ciples. In Republican primaries, the reason these principles matter
may be different from the reason in Democratic primaries. But the
principles must be the same.

So how many would it take?

Let's pick a round number: Let's say we're looking for three
hundred. A hundred for each party in key state primaries. Then

a hundred in reserve for the general election.

Those hundred in each party need not enter every race, of
course. There are lots of incumbents already credibly committed
to key reform on both sides of the aisle. But they would enter every
primary where the incumbent was not committed. In some states
(small states with committed incumbents), that would mean we
would need no candidates. In some states, we would need lots of
candidates. But overall we would need a platoon of citizen candi-
dates committed to one election cycle, to stand on a single plat-
form, to restore the possibility of democracy in America.

What are the chances this could work? Let's be wildly optimis-
tic: 5 percent.

So then, what's next?

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CHAPTER 19

Strategy 3

An Unconventional Presidential Game

In his first press conference after his "shellacking" in the 2010
congressional elections, President Barack Obama said this about
his party's defeat: "We were in such a hurry to get things done that
we didn't change how things got done. And I think that frustrated
people." 1

Count me as Frustrated Citizen No. 1. I've already explained
why "chang[ing] how things got done" was so important to our
democracy. I've already described why I believed Obama intended
to make that change central to his administration. That he didn't is
an enormous failing of his presidency, at least so far.

And the failure is not just for Obama. It's also for us. We are
Charlie Brown. Lucy has told us again and again that she is the Lucy
of change. Again and again, we have trusted her. Again and again,
we have been misled.

At some point, the dissonance begins to register, and Ameri-
cans no longer even hear the claim. Or they hear it, but they hear
it simply to confirm what they are already predisposed to believe:
here is yet another politician talking about "change" who cannot
be trusted as far as I can throw him.

Obama, I fear, was the last straw. Other candidates in that race,
and in campaigns before, had made change an element of their
brand. But Obama made it the core. It was what the whole cam-
paign was about: change. A change from Bush. A change in the way
Washington works. A change in the way politics is done.

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Strategy 3

281

Yet two years into this administration, and the word change
feels like a bad joke. In critical domains of contested policy — foreign
policy and the way we conduct the war, in particular — there has
been no change. The role of money in campaigns? Absolutely no
change. The way the work of Washington gets done? None.

I don't mean to overstate the criticism. For better (my view) or
worse (maybe yours), Obama is not Bush. There is plenty that is radi-
cally different today from four years ago, and plenty that is extraordi-
nary about this man. (Think about his speech about race during the
2008 campaign, or his speech to the nation after the Arizona assassi-
nations. Reagan has nothing on this incredible inspiration.)

Yet even if these past two presidents are not the same, it is fair
to criticize the current president for not being sufficiently differ-
ent. His campaign was the classic bait and switch: he attracted us
in the primaries with a promise of something different from Hil-
lary Clinton, but he has executed with the same playbook as Hillary

This was a betrayal. It has consequences for more than Barack
Obama. It has consequences for the politics that could make real
change possible. After Obama, there are only two ways that a
reform presidency might work. Each of these is unlikely, though
one is actually happening as this book goes to press.

It is hard for this Democrat to accept, but in 2011, the reform party
in America is not the Democratic Party. We had that moniker on
January 20, 2009- Obama then fumbled it, and the Tea Party picked
it up and ran. Earmarks were blocked in the 2011 budget because
the Tea Party insisted upon it. There is an Office of Congressio-
nal Ethics, the only independent watchdog ensuring that members
live up to the ethical rules, because the Tea Party insisted upon it.
Whatever else that party does, it has done a great deal with these
two changes alone.

As we enter the election of 2012, it is the Tea Party again that
has the chance to insist upon a presidential candidate who will
push for real change. And as this book goes to press, there is at

Clinton's.

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282 SOLUTIONS

least one candidate who is demanding the kind of change that I
have described: former governor Buddy Roemer (R-La.). Roemer
has focused his campaign on a single issue: the role of money in
politics. He has committed to taking no more than $100 from any-
one. He will take no PAC contributions. He will disclose every con-
tribution regardless of the amount to any organization that wants
to audit. "Free to Lead" is the slogan of his campaign. And his prom-
ise is to leverage the mandate he would receive into a demand to
change Congress.

In launching his campaign, Roemer embraced four principles
that must guide any legislation designed to restore independence to
Congress. As he described these principles in a lecture at Harvard:

First, no system for funding campaigns should try to silence
anyone or any view. This was the kernel of truth in the Court's
Citizens United decision. The fact that it is a corporation that is
speaking does not by its nature make the speech any less valu-
able or important to our system of democratic deliberation. We
need to hear all sides, especially the sides we're least likely to
agree with.

Second, no system for funding campaigns should force any
citizen to support political speech that he or she doesn't believe
in. Once a candidate is elected, of course, his or her salary is
paid by the government. And I'm sure that all of you have, like
I, cringed at the words of at least some of those whose salary
we pay. But there's a fundamental distinction between paying
the salaries of government officials, and paying for the cam-
paign of political candidates. Even if government money must
be used to support such campaigns, we must assure that it is
not used to advance ideas that are contrary to the taxpayer who
is funding it.

Third, no bureaucrat in Washington should be in the busi-
ness of deciding how much any campaign for Congress deserves
to get. We can't have a system where government decides the
allowance that challengers to the government will get to wage

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Strategy 3 283

their challenge. Instead, it is the people who should decide
how much anyone should get to run his or her campaign.

And finally, any system must permit — indeed, encourage —
individuals to give at least a small amount of their own money
to support the campaigns that they believe in. If Barack Obama
taught us anything, it was the extraordinary energy and impor-
tance that would come from getting millions to commit at least
a small amount. Politics is not passive anymore. The Internet
has made it possible for everyone to have skin in the game. 2

These principles are consistent with a number of programs to
fund the independence of Congress. They are consistent with the
Grant and Franklin Project. And if Roemer succeeds in his campaign,
and translates these four principles into law, the fourth American
revolution (after 1776, 1800, and 1865) will have been achieved.
Roemer's would be the most important presidency since FDR.

There are, however, two significant doubts that will dog
Roemer's campaign. The first is practical: Can a candidate raise
enough money if he takes only $100 from any citizen? The pundits
notwithstanding, no one knows the answer to that question. No
doubt in 1980 it would have been impossible to fund a national
campaign on such meager resources. But in the Internet era, whole
governments are brought down with less real resources commit-
ted. It is perfectly plausible to me that if Roemer becomes credible,
his low-budget campaign could take off, launched not so much by
expensive campaign ads, but by the energy that built Facebook and
Twitter.

Yet in the quintessential catch-22, because most believe you
can't win a campaign with contributions capped at $100, they
won't credit a campaign with contributions capped at $100. The
view "he can't win" makes it likely "he can't win," even if a major-
ity of souls would support him were they convinced he could win!

A different kind of credibility, however, is a second significant
doubt. Not because Roemer lacks credibility on this issue! He

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284 SOLUTIONS

was elected governor of Louisiana on a similar platform. He made
reforming Louisiana government his primary task. Instead, the lack
of credibility here goes back to Obama: Will America even enter-
tain the promise of yet another presidential candidate that he (or
she) is going to "take up the fight," as Obama put it, to fundamen-
tally change the system? Are we Charlie Brown? Or have we finally
learned that Lucy will always pull the football away?

It is impossible to answer that question just now. But the very
possibility that no candidate could convince the American pub-
lic that he or she was credibly committed to fundamental change
forces us to look further. Is there another way to use the presiden-
tial election cycle to leverage fundamental change into our govern-
ment?

Losing the president as an agent of change is a huge loss. Presiden-
tial elections are important to focus America, and not just because
the president is the president. But instead, because of the primary
system, presidential elections have the chance to overcome a fun-
damental problem with American politics today: attention span. We
were once a nation that listened to multiple-hour-long speeches by
our politicians. 3 We're now a nation that can't stomach more than
thirty seconds at a time. That change may well signal the decline of
American politicians. It may be that most Americans today would
be quite happy to listen to Lincoln/Douglas-style debates (which
were three hours long, with the opening speaker given sixty min-
utes, the respondent ninety minutes, and the opening speaker
thirty minutes to reply) — but I doubt it. The bigger reason is us:
We don't have time or patience for long explanations. It is a tiny
fraction of this nation that would spend even an hour listening to a
political argument.

Or, more accurately, an hour at any one sitting. For the magic
of presidential campaigns is that they spread the messaging over
a long period of time. The same point gets repeated — repeatedly.
At first it isn't heard. Or if it is heard, it isn't understood. Or if it is

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Strategy 3 285

understood, it isn't acted upon. But after the ten-millionth repeti-
tion, in the context of the tenth or fifteenth primary, finally, the
point is understood. In our multitasking way, we've become quite
good at picking up a lot in tiny bites over extended periods of time.
The presidential primary system was made for just such an atten-
tion span. Presidential primaries were made for Twitter.

Thus if we're trying to imagine how to get the American democ-
racy to demand the change necessary to remove this fundamental
corruption from our government, Obama's failure presents a dif-
ficult choice. We must find a way either to make a transformational
candidate for president credible, or to get America to engage in pol-
itics outside the ordinary cycles of ordinary presidential elections.

Let's start with the first: How could a candidate for president
credibly signal to the American public that his or her exclusive
focus would be to remove this fundamental corruption from our
government? How could she make that the only issue that mat-
tered? Or more precisely, how could she frame the issue so people
recognized that though there were a million other issues that mat-
tered more, this issue must be resolved first?

Here's one path:

Imagine a candidate — a credible nonpolitician, someone who
has made her mark in business, or as a creator, or as something
that allows people to have confidence in her. The candidate enters
a New Hampshire primary. The candidate makes a single two-part
pledge: if elected, she will (1) hold the government hostage until
Congress enacts a program to remove the fundamental corruption
that is our government, and (2) once that program is enacted, she
will resign.

What that program is, of course, will be a central focus of
the campaign. We needn't worry about the details here, though
Roemer's four principles would be an important place to start. And
how we can trust that she will actually resign will be an obsessive
focus of every news show from the launch until the election. But a
credible candidate challenging the president with a single message

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286 SOLUTIONS

of "change" — this time, change you can really believe in — would
have at least a 10 percent chance of capturing the imagination of
that single state.

There are more details to describe in this, but before I do, let me
lay out the balance of the plan:

If that candidate did respectably in New Hampshire, then all
bets would be off. Even a modest showing would spark an enor-
mous amount of energy — both good and bad. Good, as more and
more would be rallying to the plan of reform; bad, as a bunch of
party loyalists on the other side would see this challenger as an
effective way to weaken the other party's candidate for president.

That latter fact then suggests the second part to this strategy:
assuming it achieves some resonance and respectability, it will
strike many that the plan should not be exclusive to one party. So
then, imagine a second candidate — again, a credible nonpolitician,
someone who has made her mark in business, or as a creator, or
as something that allows people to have confidence in her — but
this time from the other party. This candidate makes the same
promise — she, too, will (1) hold Congress hostage until it passes
fundamental reform, and then, she, too, will (2) resign once that
reform is enacted.

Again, if this candidate can make a respectable showing in a
primary, all bets are off. The race would quickly be recast as not
the familiar battle among familiar politicians, all arguing the
same, inherently unbelievable blather. It would instead be a battle
between the reformers, Republican and Democrat, and the candi-
dates of the status quo. Those status quo politicians will, Lucy-like,
insist that they really, really, really will make "change" their mis-
sion this time. But in the face of a real alternative, it will be very
easy to undermine that argument.

As such a campaign moves toward the conventions, both par-
ties will face a difficult choice. They could each decide to rebuff the
reform movement, by rejecting the change candidate and nominating
a normal candidate who tries to make the promise of reform believ-
able. But they each recognize that if they do that, the other party can

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Strategy 3 287

grab the mantle of reform by embracing the reform candidate. And
of all the years when it would not make sense to be on the side of the
status quo, I suggest, 2012 (like 1912 before it) is high on that list.

The alternative both parties face is to embrace the reform can-
didate, and make the difference in the ticket hang upon the vice-
presidential candidate. For, of course, when the reform president
resigns, it will be the vice president who takes over. The choice
between the parties will then be the choice between these two
vice presidents. Or again, once the reform of this fundamentally
corrupt system has been enacted, we turn the business back to the
normal politicians.

That's the strategy. Assuming (big assumption) it worked (as in
it got a reform president elected), how could it work (as in change
the system)? How exactly could a president hold a government hos-
tage?

My assumption is that going into the election, both reform candi-
dates, the Republican and the Democrat, have agreed on a package
of reform. And on the same package of reform. This bit is critical,
because constitutional reform — which, even if we don't touch the
Constitution, this, in effect, is — is precisely the sort of change that
must cut across a wide range of America. A single package pro-
moted by both candidates would provide that sort of credibility.
And when either candidate wins (as, of course, one is guaranteed
to win), that candidate will be able to say with authority that Amer-
ica has spoken and these are the reforms that she demands.

That fact alone, I suggest, would have enormous power in Con-
gress. I can't imagine any member with the courage to stand up
against the results of such an election. I can't imagine the body
growing the backbone necessary for it to defend continuing its cor-
rupt ways. My sense is that both parties would be keen to get this
reform president out of the way. And the cheapest, simplest way to
do that would be to enact the package on the first day of the new
Congress. Deny the new president the privilege even of moving
into the White House, by delivering on Inauguration Day the pack-
age the people have demanded.

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288 SOLUTIONS

Imagine, however, that Congress is more resistant. Imagine it
refuses to pass the package. What could the president do then?

Ordinarily, a president is radically constrained in what he or
she can do. That constraint comes from the recognition that at
some point she will need Congress. The single most important mis-
take in George W. Bush's administration was failing to recognize
the need to work with Congress. Recognizing that need limits the
freedom that a president would otherwise have.

In our scenario, that constraint is relaxed. The president needs
Congress to do just one thing: pass this bill. Tradition has collected
within the reach of the president an enormous array of power that
she could deploy for the purpose of coercing a reticent Congress.
The president has the power to impound spending — why not the
salaries of Congress? He has the power to veto any bill — why not
every bill until Congress relents? And while the costs of shutting
down the government are huge, and borne by many who can't bear
them, both candidates could promise to keep the essential entitle-
ments untouched during the transition.

But what about all the other stuff a president does? you ask.
What about being commander in chief? Or serving as head of
state? Who would perform those duties during this constitutional
regency?

The elected president. The elected president is the president.
She has all the powers of the president, and during the term in
which she serves, she executes those powers fully. I don't mean
this officer to be compromised in any way, except in the term dur-
ing which she chooses to serve. Her term ends when Congress
ratifies the changes that the people have demanded. At that point,
she returns to private life and hands the government back over to
the politicians. She is a regent president, holding office until the
democracy grows up.

But why should she resign? you ask. After all, she's actually suc-
ceeded in getting Congress to change the fundamental corruption
that is its system. She sounds like a great person to serve as presi-
dent. Why would we bench our star player?

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Strategy 3 289

The candidate's promise is the essential element necessary to
make her a credible change candidate. She needs to commit to
reform in a way that makes it plain she intends to reform. If she
doesn't commit to that, or if she doesn't carry through with her
commitment, then she's Lucy, and once again we're Charlie Brown.

Moreover, her succeeding in getting this legislation passed
would not necessarily make her a great president. Indeed, the atti-
tude and inflexibility necessary to succeed in this role is precisely,
I would argue, the wrong attitude and flexibility necessary to suc-
ceed as president. No successful president has ever done it alone.
Not FDR, or Lincoln, or even Washington — all of them depended
upon rich and serious engagement with all sides of an issue. That
engagement requires humility, flexibility, and good political sense.

That's not our reform, or regent president. As romantic and Holly-
woodesque as she would seem, if she tried to carry that rigid and
absolute character over into every sphere of presidential leader-
ship, she would fail. A great president is not a great reformer. We
have to recognize this, and separate the two. And that's precisely
what this plan is intended to do.

What are the chances this would work? Let's be wildly optimis-
tic: 2 percent.

So, what's next?

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CHAPTER 20

Strategy 4

The Convention Game

It has never happened. Or maybe it did, once. At the founding.
But beyond that single example, we've never had a transforma-
tion effected by a federal constitutional convention.

In 1787 the best bet about the future of the United States was
that the Union would dissolve and generations of internal wars
would begin. America — or better, the "united States" — had won
their (and at the time, the plural possessive was all anyone would
dare to utter) war against Britain. But they had all but lost the
peace. States refused to support the confederation. Congress had
no power to deal with a wide range of crucial issues. And in the
state legislatures, corruption was rampant. 1 The Framers feared
becoming their parents: "Look at Britain," instructed Patrick Henry,
"see there the bolts and bars of power; see bribery and corruption
defiling the fairest fabric that ever human nature reared." 2 " [I]f we
do not provide against corruption," George Mason warned, "our
government will soon be at an end." 3

The Constitution in effect at the time made change seem quite
unlikely. Article XIII of the Articles of Confederation stated:

Every State shall abide by the determination of the united States
in congress assembled, on all questions which by this confeder-
ation are submitted to them. And the Articles of this confedera-
tion shall be inviolably observed by every State, and the union
shall be perpetual; nor shall any alteration at any time hereafter

290

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Strategy 4 291

be made in any of them; unless such alteration be agreed to in a
congress of the united States, and be afterwards confirmed by
the legislatures of every State.

And while everyone might well have agreed that things were
bad, there is more chance of getting the Senate today to agree to a
carbon tax than to imagine the thirteen states agreeing to a funda-
mental alteration in the Articles of Confederation.

So our founding fathers decided to break the rules. After the
failure of a conference at Annapolis in 1786, Congress convened a
new conference to be held in Philadelphia in 1787 The "sole and
express purpose" of that conference was to promise amendments
to the Articles of Confederation to "render the federal constitution
adequate to the exigencies of Government & the preservation of
the Union." 4

Amendments. Not a new Constitution. But quickly the organiz-
ers of that convention convinced those present (and not every state
even deigned to send a delegate) to meet in secret. (No WikiLeaks
to fear.) The windows were shut. And for almost three months the
Framers banged away at a document that we continue to revere
today.

They took to this exceptional path because they recognized
that sometimes an institution becomes too sick to fix itself. Not
that the institution is necessarily blind to its own sickness. But that
it doesn't have the capacity, or will, to do anything about it.

Sometimes an institution, like an individual, needs an interven-
tion, from people, from friends, from outside.

Our Framers recognized this about their government. They had
just lived it. But they also recognized the disruption and danger that
come from revolution. Instability at some point is death, even if too
much stability is also death. It may well be, the Framers thought,
that the only way to restrain Washington was with "a well regu-
lated Militia" (and hence the Second Amendment). But they hoped
that restraint could be achieved through more peaceful means.

So the Framers added to our Constitution one more way out.

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292 SOLUTIONS

Obviously, to them at least, the people always retained the right to
"alter or abolish" their government. That was the premise of the
Declaration of Independence, and they didn't mean to deny that
principle through their new Constitution — especially since the
authority to enact that new Constitution (by violating the terms of
the Articles of Confederation) depended upon it. (Indeed, as Kurt
Lash argues, "it is at least plausible the Preamble and Assembly
Clause presented by Madison to the First Congress were intended
to explicitly recognize the people's right to assemble in conven-
tion and alter or abolish their Constitution." 5 Reflecting a similar
understanding, Edmund Pendleton said at the Virginia ratifying
convention that if Congress refused needed amendments, "we will
assemble in Convention; wholly recall our delegated powers, or
reform them so as to prevent such abuse." 6 )

In addition to these extraconstitutional means of constitutional
reform, however, the Framers added two more tools that were
internal to the Constitution itself: First, a simpler method by which
Congress could initiate amendments to the Constitution. Second, a
more complicated method by which "a convention" could propose
amendments to the Constitution.

Under the first path, Congress proposes an amendment to the
Constitution, if two-thirds of Congress agree. Under the second
path, Congress calls "a convention for proposing Amendments" if
two-thirds of the state legislatures ask it to. Amendments proposed
either way get ratified if three-fourths of the states agree.

The first path has been the exclusive path for all twenty-six
amendments to our Constitution. Every amendment has been first
proposed by Congress and then ratified by the states.

The second path has never been used. Indeed, in the first one
hundred years after the founding, there were only ten applications
calling for a convention submitted by the states to Congress. 7 But
even though no convention has been called, the calls for a con-
vention have had an important reformatory effect, most famously
in the context of the Seventeenth Amendment (making the Sen-
ate elected), when the states came within one vote of calling for

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Strategy 4 293

a convention, and Congress quickly proposed the amendment the
convention would have proposed. 8

Even though it has never happened, however, a constitutional
convention is the one final plausible strategy for forcing fundamen-
tal reform onto our Congress. 9 It is also the most viable grass-roots
strategy for forcing reform onto the system. It's going to be easier
to organize movements within the states to demand fundamental
reform than it will be to organize Congress to vote for any particu-
lar amendment to the Constitution to effect that reform. And more
important, it's going to be much easier to get a conversation about
fundamental reform going in the context of a call for a convention
than it will be through any other plausible political means.

The reason is an important strategic opportunity that a call for
a convention would offer and that a demand for an amendment
would not: different souls with different objectives could agree
on the need for a convention without agreeing on the particular
proposals that a convention should recommend. Some might want
an amendment to give the president line-item-veto power. Some
might want a balanced-budget amendment. Some might want term
limits. Some might want to abolish the Electoral College, or ban
political gerrymandering. And some might want to demand a sys-
tem for funding elections that restores integrity and independence
to Congress (me!).

All of these different souls could agree at least on the need
to create the platform upon which their different ideas could be
debated. That platform is the convention. And if the convention
then recommended some of these changes, those changes would
be sent to Congress to be sent to the states for the purpose of rati-
fication. They would remain invalid, mere "propos [als] ," until they
were ratified by thirty-eight states.

Thirty-eight states. That is an almost impossibly large propor-
tion of America — so large as to offer the first best reason that we
should not fear this process. There are easily thirteen red states
and thirteen blue states in America today. One chamber in each
of thirteen states is enough to block any amendment. Neither

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294 SOLUTIONS

side needs to fear that the other is going to run away with our
Constitution.

Instead, in my view, this process could well give America the
single best hope for a sustained conversation about what changes
this democracy needs to restore integrity and trust to the system.
The many months that it would take to build a movement within the
states would give citizens in each of these states a chance to think
about why such reform is necessary. The furious intensity of debate
that would be directed against the very idea of a convention would
make it almost impossible for any thinking American to miss what
was at stake. And then the convention itself could provide a remark-
able opportunity — if properly structured — for real reform to be
considered and debated. There is no other process that could come
close, in my view, to exciting the attention this issue needs and the
reflection and deliberation it deserves.

Yet the convention is reviled by scholars and by insiders on the
Left and Right alike. The process, they insist, is too uncertain. Too
dangerous. A convention once convened could "run away," 10 these
scholars say (to where, exactly?). The whole process is just too rad-
ical and untested for a mature and stable democracy.

This campaign against a constitutional convention is moti-
vated by principle as well as by politics. 11 There are some who are
genuinely fearful of the uncertainty that such a procedure would
raise. But as I will explain, the danger motivating that fear is com-
pletely avoidable. Others are not interested in avoiding that danger,
because their real objection is political: the strongest movements
for a convention in our lifetime have been movements from the
Right. The most recent of these was a call for a convention to
require a balanced budget. By 1989, thirty-two states had petitioned
Congress to make that call (two short), before Alabama rescinded
its petition and the movement apparently died. 12

What's clear, however, is that the Framers intended the conven-
tion clause to address precisely the problem that we face today.
When the convention first turned to the amending power, many
thought Congress should have only a limited role in passing

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Strategy 4 295

amendments, since it would be Congress that "would be the very
occasion for moving to amend." 13 The insiders are not going to fix
this mess. We need instead a movement from the outside. (The
same insight motivated Lincoln, when he called for constitutional
amendments through the convention procedure, because he
wanted "amendments to originate with the people themselves.") 14
The convention clause was meant to channel such a movement.
Again, not exclusively. The Framers did not intend to abolish the
Declaration of Independence's self-evident right "to alter or to abol-
ish" a government, regardless of the procedures specified. Instead,
they intended to provide at least one (relatively) regular procedure
to complement that right.

But how this complement is to be invoked is famously uncer-
tain. Who sets the rules for the convention? How are delegates
selected? What defines the agenda? Are there any limits to what it
can decide?

Answering these questions is of course a necessary and proper
step to any responsible constitutional amending process. And
the Constitution is quite explicit about how such "necessary and
proper" means are to be specified: Article I, section 8, clause 18,
says that it is Congress that has the power "[t]o make all Laws
which shall be necessary and proper for carrying into Execution
the foregoing Powers, and all other Powers vested by this Constitu-
tion in the Government of the United States or in any Department
or Officer thereof."

"All other Powers vested by this Constitution" certainly includes
the power to call a convention. This simple and plain text at the
core of our constitutional design gives to Congress all the power
it needs to ensure an orderly and sensible procedure for initiating
and conducting a convention. 15

And indeed, Congress has come very close to exercising this
sensible judgment precisely. When it seemed plausible that enough
states would call for a convention to consider an amendment to
require a balanced budget, Senator Orrin Hatch introduced an
eminently sensible bill that would have provided all the procedure

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296 SOLUTIONS

necessary to form and conduct a convention. This bill (Senate Bill
No. 40, from the Ninety-ninth Congress 16 ) specified the proce-
dure by which a call by a state for a convention would be recog-
nized. It specified the procedure by which a convention would be
constituted — including how many delegates each state would elect
and (my favorite bit of the bill) a requirement that no senator or
representative "be elected as delegate." 17

Every reasonable question raised by scholars about how a con-
vention would be constituted and run has been addressed by this
very reasonable bill. Not all scholars, however, accept the answers
that this bill would give. In particular, though Senator Hatch's bill
explicitly permits states to ask for the convention to narrow its
agenda to particular topics, these scholars insist not only that the
convention cannot be so limited, but that any call for a limited con-
vention is invalid. As Walter Dellinger puts it, "[e]ven when the
applying state legislatures seek only to limit the convention with
respect to subject matter, the case against the validity of the appli-
cations is still persuasive." 18

This can't be correct. The only convention America has ever
seen was a convention called for a limited purpose: the conven-
tion that gave us the Constitution itself. And the consistent practice
among states has always been to recognize the validity of a lim-
ited call for a convention. 19 There is not a single sentence reported
anywhere that suggests that the Framers intended to proscribe
the manner in which a convention could be called. No doubt,
they wanted that convention to be a national body. No doubt they
wanted it to consider issues that affected the nation as a whole.
But there is simply nothing to support the claim that they meant
there to be an unwritten requirement that any call for a convention
be made with the magic words "We, the Legislature of X, hereby
petition Congress to call a convention to consider any amendment
to the Constitution whatsoever." To the contrary, at least some at
the convention expected "future conventions to be rather limited
affairs." 20

Now, of course, the only example of a convention in our history

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Strategy 4 297

is also an example of a convention that exceeded the limits of its call.
And that's precisely what concerns many people about the idea of
calling for a convention: How could we be sure that the convention
didn't propose radical changes to our Constitution? What would
stop fundamentalists from repealing the separation of church and
state? Or antiabortionists from reversing Roe v. Wade? Or crazies on
the Left mandating government ownership of the Internet?
But let's keep this argument clear.

First, the fact that the limits on a call for a convention have
been exceeded does not show that a call for a limited convention is
invalid, any more than the fact that banks have been robbed shows
that bank managers have no right to lock their vaults. To the con-
trary: The call for a limited convention could be perfectly valid.
The invalid part is the exceeding of those limits. The question of
the proper remedy for invalidity is distinct from the question of
whether the line drawn is valid. Thus, as the historical practice
shows, states, in my view, are perfectly entitled to narrow the
scope of issues they'd like a convention to consider, and Congress,
in my view, is perfectly entitled to specify the scope of the conven-
tion's work consistent with the proper limits expressed by states,
even if no one can control what actual amendments a convention
proposes.

Second, the same tradition that permits the calls for a conven-
tion to be limited also shows that conventions sometimes ignore
those limits. But the critical question is this: With what conse-
quence? As our first constitutional convention plainly recognized,
because it had exceeded the scope of its authority, it had no author-
ity to change anything on the basis of its proposed Constitution
alone. 21 Instead, as James Wilson put it, the Framers conceived of
themselves as "authorized to conclude nothing, but ... at liberty to
propose anything." 22 James Madison made the same point in Fed-
eralist 40. Indeed, the anti-Federalists (who opposed the Consti-
tution) worked hard to invalidate the work of the convention by
arguing that the convention had no right to propose a constitu-
tion because that exceeded the mandate of the convention. The

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298 SOLUTIONS

anti-Federalists failed. Again, as Madison and others responded, the
convention didn't rest upon any "right" to propose anything. They
merely asked that the Congress refer their proposal to state conven-
tions to be considered and ratified if the states so chose.

That is precisely the same "danger" that we would face today.
(For we have never seen a "runaway" convention that purported
actually to change the Constitution on its own.) A convention called
for the purpose of considering amendments to restore the inde-
pendence of Congress, but that instead proposed an amendment to
abolish the Electoral College, would have no right to demand that
Congress do anything with its work. Congress would be free, of
course, to take up the amendment itself. But it would also be free
to ignore it.

The point, as Paul Weber and Barbara Perry convincingly argue,
is that we need to think about this "danger" in political terms, not
legal terms. 23 The question is, How likely is it that the proposals
of a runaway convention — a convention that expressly ignored
limitations called for by the very states that had called for the
convention — would nonetheless be ratified by three-fourths of the
states?

It is not likely. At all. But if it happens, then it would happen
only because that runaway convention had come up with the same
sort of world-changing brilliance that our Framers did. And if it
did, then why wouldn't we want the states to ratify it? Or put more
strongly: If an "illegal proposal" were so strong as to overcome
its own illegitimacy, and rally the support of thirty-eight states, it
would have to be an incredible proposal! Not an incredible pro-
posal for the Left or for the Right. To win the approval of thirty-
eight states would require a proposal that cut across both Left and
Right. What possible reason is there for us to fear a change that was
supported by such a substantial majority?

Thus the states, in my view, are perfectly entitled to ask Con-
gress to narrow the scope of the convention it convenes. The
Congress, in my view, is perfectly entitled to set the agenda of that
convention consistent with those requests. Congress restricts the

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Strategy 4

299

convention only at its peril. The states impose too many restric-
tions on the call for a convention only at the convention's peril. If
a state says that it asks Congress to consider one topic only then
Congress will convene a convention only if thirty-four states make
the same proposal. The movement for a convention requires a bit
more flexibility. No doubt it is reasonable not to want a conven-
tion to roam wherever an academic would want. But it is politi-
cally foolish — if indeed the state wants a convention — to forbid it
from at least discussing issues that might not yet seem compelling
to that petitioning state.

These questions, however, do lead me to suggest a possible
compromise. One way to avoid this runaway fear, while preserv-
ing the opportunity for states with different concerns to join with
a common purpose (to have a convention), would be for the peti-
tion calling for the convention itself to also call on Congress to set
certain limits to the scope of the convention. Here's an example:

The State of Utah, speaking through its legislature, pursuant to
Article V of the Constitution, hereby petitions the United States
Congress to call a convention for the purpose of proposing
Amendments to the Constitution of the United States of America.

Furthermore, Utah would propose that convention consider
amendments to strengthen the veto power of the president
by, for example, among other possible solutions, giving him a
"line-item-veto" authority.

Furthermore, Utah requests that its proposal notwithstand-
ing, Congress restrict the agenda of the convention to consider-
ing only those matters enumerated by at least 40 percent of the
states calling for the convention.

And finally, Utah requests that Congress exclude from eli-
gibility as delegates to the convention any current Member of
Congress.

This proposal explicitly calls for a convention for proposing
amendments. It explicitly enumerates the particular type of amend-
ment the state wants considered. But it asks Congress to filter out

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300 SOLUTIONS

any subject that doesn't have at least twenty states behind it. And it
includes the (in my view, crucial) clause that no sitting member of
Congress may be a delegate to this convention.

If thirty-four states passed a version of this application, then
Congress would be required to call a convention. It would be enti-
tled to set an agenda for the convention consistent with the 40 per-
cent clause. And it would be entitled to ban members of Congress
from being delegates to the convention.

That part is the easy work here. The hard work would be build-
ing the movement to support a convention. That building will take
time, and a particularly risky strategy — at least for the movement.
Like the transformative-president strategy, it is slow and deliberate;
it happens state by state; it doesn't assume the world pays attention
all at once, but instead, it understands that people come to under-
standing in their own time and, increasingly, in 140-character mis-
sives. It would take a couple of years at least to get within striking
distance of thirty-four states' making the call. That's plenty of time
to educate and persuade.

But unlike the race for the presidency, this political battle doesn't
fit into any existing media category. So it might be hard to get the
earned-media necessary to make it work. If Rhode Island passed a
resolution, and then Washington, and then Iowa, those would be the
first steps, but on a path that most don't even recognize exists.

Likewise, unlike the race for the presidency, this battle wouldn't
have a candidate. There'd be no single (or even two) souls for the
public to love or hate. There'd be no intrigue or scandal for the
media to focus on.

Yet both of these weaknesses may actually be strengths. Such
a movement needs to live beneath the radar at first. Like the Inter-
net itself, it needs to develop in a world where all the experts say
that it's impossible, so that those who understand the world only
through the experts ignore it as it develops. Likewise, it needs to
develop by exercising the civic power of ordinary citizens. We've
seen people devote endless hours to a single person; we need the
same devotion to an ideal, or a cause. The discipline of a campaign

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Strategy 4 301

that needs to rely upon a million volunteers is precisely the discipline
constitutional reform needs. And a convention, even an Article V
convention, especially.

The campaign would need a common infrastructure — a plat-
form upon which strategy and substance could be worked out. And
more important, an infrastructure that would develop a campaign
that could move from state to state, or from state to states, as states
passed the resolution making the call.

That platform need not be heavily staffed. Indeed, it needs to
grow with the discipline of our own revolutionaries: small, appar-
ently disorganized citizens fighting for liberty. A general, a staff to
support infrastructure, and a call for citizens to engage are every-
thing the system needs.

That platform would prove itself as it targeted state legislatures,
and delivered. With each victory, attention would grow. The list of
supporters would become more engaged. That engagement would
attract others. And if it could be kept authentic, removed from the
control of either party in D.C., it might yet spark the inspiration
such reform needs.

Indeed, if I were to design the movement, I would place at the
top of its requirements that it be a citizens' movement only Of
course we welcome the support of anyone — politicians, corpora-
tions, foreigners, even dolphins. But the work necessary to make
this succeed must come from citizens alone. And more precisely,
citizens who pledge that they are not seeking a role in Congress.
Let no one doubt the integrity of those participating in this move-
ment. Remove any question of ulterior motive.

As I've talked about this idea in literally hundreds of places
around the country, the single most pressing objection is the fear
of American ignorance — the belief that Americans are too ignorant
to inform or direct a constitutional convention, and that therefore
we should not give them the chance.

Americans are ignorant about politics and our government no
doubt. Less than a third of us know that House members serve
for two years, or that senators serve for six. 24 Half of us believe

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302 SOLUTIONS

foreign aid is one of the top two federal expenditures. It is actu-
ally about 1 percent of the budget. 25 Six years after Newt Gingrich
became Speaker, only 55 percent of us knew the Republicans were
the majority party in the house, a rate just slightly better than the
result if monkeys had chosen randomly. 26

So, ignorant we are. But we're not stupid. Indeed, for all the rea-
sons this book has collected, remaining ignorant about politics and
our government is a perfectly rational response to the government
we have. The question isn't what we know. The question is what
we're capable of knowing, and doing, if we have the right incen-
tives, and the right opportunity.

Yet I've also come to see that there's no arguing people out of
their fear of this ignorance. The only opportunity is to show them
something that convinces them of something different. So here's
the biggest gamble that I would place in this plan:

As we push for states to call for Article V conventions, we
should simultaneously be convening shadow conventions in each
of these states. These shadow conventions would not be casual or
ad hoc. Instead, they would be built according to a common plan
developed by the organizing platform for this movement. Think of
it as a convention in a box, which would map how the convention
should be crafted. In my view, drawing upon a rigorous technique
first developed by Professor James Fishkin, these shadow conven-
tions should be constituted themselves as deliberative polls. 21

A deliberative poll?

To understand a deliberative poll, you must first ignore the word
poll in the title. The aim of a deliberative poll is not just to figure
out what people think. The aim instead is to figure out what peo-
ple would think if they were informed enough about the matter
that they were being polled about. Think of it as a jury, only better:
the sample is large and representative (at least three hundred for a
large population), and the process begins by providing participants
with the information they need to speak sensibly about the matter
they are addressing.

In this case, the deliberative poll would frame the question of

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Strategy 4 303

reform: What will reform require? What would good or meaning-
ful reform be? What changes to the Constitution, if any, are neces-
sary to effect this reform?

The output of these deliberative polls would reflect the views
of ordinary citizens about how or whether our Constitution should
change. Because the participants are randomly selected, there's no
chance of special-interest lobbying. Because they are representa-
tive, there's no chance of packing the process from one side or the
other. First, region by region and then, if it takes off, state by state
within regions, this experiment in a deliberative convention would
give Americans a baseline to evaluate the capacity of American citi-
zens to govern. And as these conventions succeed in demonstrating
sanity and good sense (and I am certain they would), the support
for a similar convention to propose amendments to the Constitu-
tion would grow.

For this is the core assumption I have about what this Article V
convention should be: It should not be a convention of experts. Or
politicians. Or activists. Or anyone else specific. It should be a con-
vention of randomly selected voters called to a process of informed
deliberation, who then concur on proposals that would be carried
to the states. Delegates to this convention would have their sala-
ries and expenses covered by the convention. Employers would be
mandated to hold the jobs of the delegates. The convention would
convene in a remote place, far from Washington, and maybe far
from the Internet. And delegates would then be charged with the
duty the law had placed upon them: to propose amendments to the
Constitution.

I recognize that of all the insanity strewn throughout this book,
this will strike readers as the most extreme. Ordinary citizens? Are
you crazy? Proposing amendments to our Constitution? When two-
thirds of Americans can't even identify what the Bill of Rights is? 28

Whether you would agree with the final step in this plan or
not isn't important just now. My purpose here is not to convince
you of this ultimate step. I'm only trying to describe an interim
step — that as the push for an Article V convention is made in each

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304 SOLUTIONS

state, shadow conventions in each state should also be convened.
If those shadows produce garbage, then my idea is garbage. But if
those shadow conventions produce a series of sensible proposals,
then, I suggest, we'll be in a position to ask whether we should
make the experiment the model.

For, after all, the competition is not very great here. Given the
insanely low quality of work coming from at least our federal legis-
lature (states are actually more interesting and more encouraging),
I'd be willing to make a very substantial bet that these amateur
citizen conventions will impress America much more than the pro-
fessional legislature does. Politics is that rare sport where the ama-
teur contest is actually more interesting than the professional. We
should at least give it a chance.

So, in a single line, this strategy goes like this: A platform for
pushing states to call for a federal convention would begin by
launching as many shadow conventions as is possible. In schools,
in universities — wherever such deliberation among citizens could
occur. The results of those shadow conventions would be col-
lected, and posted, and made available for critique. And as they
demonstrated their own sensibility, they would support the push
for states to call upon Congress to remove the shadow from these
conventions. Congress would then constitute a federal convention.
That convention — if my bet proves correct — would be populated
by a random selection of citizens drawn from the voter rolls. That
convention would then meet, deliberate, and propose new amend-
ments to the Constitution. Congress would refer those amendments
out to the states for their ratification.

And so, again, what's the chance this might work? I think, com-
paratively, quite good: with enough entrepreneurial state represen-
tatives, let's say 10 percent at a minimum.

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CHAPTER 21

Choosing Strategies

I've outlined four strategies for effecting the change we need. None
are likely to succeed alone. But which makes the most sense? And
why should we pursue any of them if none are likely to succeed?

To understand the challenge, we need to keep the enemy in
focus and understand how it will react. As the movement to kill the
system of dependence that is D.C. grows, the resistance will grow
as well. There are too many people whose livelihoods depend
upon the status quo. Some of them would be happy to see the sys-
tem change. Most will fight like hell to protect it.

So, what does that fact say about the best strategy to defeat the
status quo?

Insurgent movements have to fight the war on unconventional
turf. If the issue gets decided finally within institutions that depend
upon things staying the same, things will stay the same. But if we
can move the battle outside the Beltway, to venues where the sta-
tus quo has no natural advantage, then even small forces can effect
big change.

That's the advantage to the three unconventional strategies.
Each of them — running nonpolitician candidates, running reform
presidential candidates, calling for an Article V convention — is
something that hasn't happened before. The structures for control-
ling what happens in American politics haven't developed to con-
trol these contexts. Thus, the chance to evade the power of the
status quo is greater with these three. And if I had the power to
launch this war, I would launch it by launching all three at once.

Even then, however, the chances are still not great. We've had
small examples of status quo defeats, but certainly nothing as big

305

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306 SOLUTIONS

as dislodging the power of K Street. Any sane soul who looked at
this cause would have to conclude that the odds are overwhelm-
ingly against us. So, why do it? Why waste your time?

I was asked this question quite pointedly once, after a lecture at
Dartmouth. "What's the point?" the sympathetic listener asked. "It
all seems so hopeless."

And for the first time in my life, in the middle of a public lec-
ture, I was so choked by emotion that I thought I had to stop. For
the picture that came into my head as I struggled for a response
to this fair yet devastating question was the image of my (then)
six-year-old boy, and the thought, the horror, of a doctor's telling
me that he had terminal cancer and that "there was nothing to be
done." I painted that picture to that Dartmouth audience. And I
then asked this: "Would you give up? Would you do nothing?"

Because of course I understand the futility in fighting. Of course
I can read the odds — I typed them, by hand! I feel the dismissive
impatience of those inside the system whenever I talk about chang-
ing the system. I can almost feel them roll their eyes as they hear
about a fight to change the status quo.

But I also know love. And I know what love says to the rational.
Love makes the odds irrelevant. It is a commitment to doing what-
ever can be done — sometimes destructively so — to beat the odds
and save the soul who taught you that love.

We forgive this irrationality, especially when it comes to kids.
Indeed, we celebrate it. Think of the story of John and Aileen
Crowley (retold in the 2010 film Extraordinary Measures), who
did everything humanly possible to drive research for a cure to the
disease that doomed their kids. Or of Denzel Washington in John
Q (2002) taking a hospital hostage to force them to transplant his
heart to his son. Or of Harrison Ford in Air Force One (1997), play-
ing a U.S. president who sells the interest of America to terrorists
so as to save his twelve-year-old daughter. These are all heroes act-
ing insanely, but for a reason we all understand well.

Why not the same for country?

I wouldn't compare my love for my family and my love for my

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Choosing Strategies

307

nation, except to say that the irrational parts in each feel very much
the same. Or at least one irrational part that I would hope you saw
as the same: we should be willing to do whatever we can, the odds
be damned, to save both when we see, when we finally see, the
threat that stands above both.

The poor do this all the time for us — not just the poor, but many,
many who are poor. We call them soldiers. They volunteer to fight
wars for democracy. They put their lives on the line, literally, for
an argument that is, in my humble opinion, vastly more attenuated
to the end of saving democracy than anything I've described here.

The war I've endorsed won't kill anyone. And it is a war we can't
rely on poor people to fight alone.

So you pick your poison. You tell me which hopeless strategy
is best. Or you come up with a better one. But don't tell me this is
hopeless. Hopelessness is precisely the reason that citizens must
fight.

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Conclusion

Rich People

Arnold Hiatt was the chairman of Stride Rite Shoes, a company
that has spread many beautiful designs, none as important as
Keds. He is also one of the Democratic Party's largest contributors.
In 1996 he was its second-largest contributor, maxing out to sup-
port close to forty congressional candidates who had each prom-
ised they would support campaign finance reform. Many of those
candidates won. Their cause, however, has not been won. Yet.

In the spring of 1997, President Bill Clinton wanted to thank
the largest contributors to the Democratic Party. He also wanted
to hear their ideas for what he should do with the last four years of
his presidency. Thirty of the top contributors were invited to the
Mayflower Hotel. None of them knew of course that Clinton would
be frittering away almost two-thirds of that four-year term because
of a fling with an intern. That was all to come. Instead, he was
then still riding high as the Comeback Kid who had beaten back
the Republican Revolution to become the first Democratic presi-
dent since Franklin Delano Roosevelt to be reelected after a full
first term.

At the end of the dinner, Clinton gave some remarks. He then
asked the guests to give him their remarks about what he should
be doing, and how he should be governing. One by one, the guests
stood and offered their ideas. The president listened and took
notes. The evening appeared to be having its intended effect: the
fat cats were being attended to; their purr was warming up nicely.

309

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310 Conclusion

Hiatt was the last to speak. Sitting two seats from the president,
he stood, looked the president straight in the eyes, and said (as it
was told to me and as best as I can reconstruct, with just a little
poetic license taken with the words that Hiatt has kept in the form
of notes only):

Mr. President, I know you're an admirer of Franklin Delano
Roosevelt. So I want you to put yourself in FDR's shoes in
1940 — the year when Roosevelt realized that he was going
to have to convince a reluctant nation to wage a war to save
democracy.

Because that, Mr. President, is precisely what you need to
do now — to convince a reluctant nation to wage a war to save
democracy.

The war that Hiatt pushed, however, was not a war against Fas-
cists. It was a war against fat cats, against people like the people in
that room. People who believed that they were entitled to direct
public policy merely because they were rich. People who had con-
vinced the American people that democracy did not work, because
the politicians listened to them, the fat cats, and not to the people.
Hiatt challenged the president to recognize that "current campaign
finance practices are threatening this nation in a different, but no
less serious way." "Only your leadership," he said, "and your office
can turn this around."

There was silence when Hiatt finished. No doubt, some were
uncomfortable. Hiatt remembers the president being "gracious."
The only published account reports him as being less than charita-
ble: "Clinton's response effectively slashed Hiatt to pieces," accord-
ing to Peter Buttenwieser, "humiliating him in front of the group." 1

When I first heard this story, this simple act of courage moved
me beyond words. I didn't know Hiatt. I hadn't heard of this effort
to get Clinton to persuade a reluctant nation to wage a war to save
democracy. But I could feel how impossibly difficult it must have
been to utter those words, then and there. It was an act of courage,

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Conclusion 311

impossible for most of us if only because it was certain to alienate
Hiatt from his friends.

For Hiatt's challenge effectively divided those Democrats into
two very different camps: one supporting fundamental reform and
the other preferring the status quo. Whether or not Hiatt was the
only member of the reform camp, there was a certain majority that
liked the status quo.

Over the past four years, as I've worked to recruit supporters
to this campaign, I've come to recognize these two camps. What
unites them is a basic commitment to liberal politics. Not radical,
leftist policies, but Democratic policies far from the extremes of
the GOP.

But what divides them, these fat cats of the Democratic Party,
is the question of whether they should continue to have the power
over the Democratic Party that they have, and hence, for those
brief moments when the party controls our government, power
over the government as well.

Some among these fat cats love the life they now have — a life
in which they can get any senator on the phone, or even the presi-
dent, in a pinch. They love the world in which the most powerful
person in the world, the president, invites them to dinner.

I don't mean that they love this world of power merely because
they like power. Maybe that's why they like it, but that's not how
they understand it. Instead, these insanely rich people actually
believe that their views about patent policy are better than those
of people who have studied the question for thirty years. Or that
their insights about health care are worth more than the views of
doctors or nurses. They are convinced they are wise because the
market made them rich. And they believe that a president should
consider himself privileged to listen to their very comfortably
funded wisdom.

As I've tried to convince these people to fight for a world where
they don't have this power, I have grown accustomed to a certain
deflated recognition. You can walk them through the thousand rea-
sons why this system of government is corrupt; you can get them

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312 Conclusion

to acknowledge the million times when bad influences have pro-
duced insanely bad policies; you can bring them to acknowledge
the poison that this economy of influence is for democracy, and the
rule of law. Yet, in the end, they resist. They just can't imagine giv-
ing up their own power.

Sometimes they're quite honest about it. I remember one soul,
the certain inheritor of billions, telling me flat out, "I like my
influence. I like being able to get senators on the phone." (He has
subsequently flipped, and is now a strong supporter of small-dollar-
funded elections.)

But sometimes they're just oblivious, and their obliviousness
brings out the worst in me. I remember once talking to one about
the principle of "one person, one vote" — the Supreme Court's doc-
trine that forces states to ensure that the weight of one person's
vote is equal to the weight of everyone else's. He had done work
early in his career to push that principle along, and considered it,
as he told me, "among the most important values now written into
our Constitution." "Isn't it weird, then," I asked him, "that the law
would obsess about making sure that on Election Day, my vote is
just as powerful as yours, but stand blind to the fact that in the days
before Election Day, because of your wealth, your ability to affect
that election is a million times greater than mine?" My friend — or
at least, friend until that moment — didn't say a word.

That's one side of this divide. On the other is a very different
group: again, insanely rich, but souls who are keen to give up their
power. Not because they hate the attention of the president of the
United States (though, I imagine, depending upon the president,
there are those sorts, too). And not because their own business
wouldn't benefit from the sort of access and interest their position
now gives them (for, of course, for many of these people, a good
and effective relationship with the government is a key driver of
their bottom line). But rather, because they recognize that in a
democracy their power is wrong. Not their wealth. Their power.
There's nothing wrong with getting rich. There's everything in the
world to praise about being successful in business, or sports, or the

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Conclusion 313

arts. But the idea that in a democracy you should be able to trade
your wealth into more influence over what the government does is
just wrong. It denies the basic principle of "one person, one vote."
It says some votes are more equal than others, and solely because
of the money those voters have.

That's an important qualification. The egalitarianism that
democracy demands is not that there be no influential people. It
is that influence be tied to something relevant to the democracy. I
was once told of the conversion story of one young, connected (as
in to the most powerful people in our society) soul. She described
a day on Capitol Hill when the group she led was trying to lobby
to get a special provision added to the health care bill to benefit
children. The idea was to get senators to talk to the nation's lead-
ing expert on children and health. Though the group had planned
the day for weeks, they couldn't get any confirmed meeting with
any representative or senator of any significance. Everyone prom-
ised they would meet if they could, but as the day of the meeting
approached, the members were all too busy.

The morning of their seemingly doomed tour, this connected
soul made a single telephone call to the chief fund-raiser for one
of the senators. Within minutes, the calendar of that senator, and
other members', had been cleared, and the group got their meet-
ings. Of course, no promise had been made. It was a simple request
for a favor. But because of who she was — a powerful, intelligent,
connected soul — the favor was immediately granted.

As the group left the Capitol after the meeting — literally, as they
were walking down the steps behind the building — the connected
woman who had made the call got a telephone call herself. It was
from the chief fund-raiser for one of the senators they had just met.
"Do you think you might help the senator out by holding a small event
in LA?" As she reflected to me later on, this is a system where "the
most important person on the issue of children's health had practi-
cally no access at all, yet I, merely because of wealth and connections
to wealth, have all the access I want. This," she said to me, "is wrong."

These rich people — people like this woman, or Arnold Hiatt

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314 Conclusion

or Alan Hassenfeld (chairman of Hasbro) or Jerry Kohlberg
(co-founder of Kohlberg & Company) or Edgar Bronfman, Jr.
(CEO of Warner Music Group) or Vin Ryan (founder of Schooner
Capital) — recognize that there's something wrong with their
power. Each of them came to see this in different ways. But now
they all see it. And some, such as Hiatt and Hassenfeld, have now
made it their life's work to dismantle their own power, and the
power of people like them, so as to restore this republic.

There's something astonishing and hopeful about these good
rich souls. I'm never much moved by large charitable gifts from the
very rich, for rarely do those gifts actually change the comfortable
life that the giver leads. Much more impressive to me is the family
of four, struggling to make ends meet, which manages nonetheless
to commit to the United Way, or to put a significant amount in the
church collection plate each week.

But the sacrifice of these good rich souls is a real sacrifice. If
they succeed in changing the way political power in America is
controlled, they will have a significantly different life. This isn't
one less vacation house in the Bahamas. This would be a move
from quintessential insider to just one of "the People."

Even more striking is that any number of them could, on their
own, fund the reform that would save this republic. If this is a "war
to save democracy," then the total cost of this war would be less
than half as much as the Pentagon spends every single day. For
$1 billion, a campaign to save this democracy could be waged and
won. There are at least 371 billionaires in America, 157 of whom
are worth more than $2 billion. 2 One of them could fund the cam-
paign that would make this republic free again. Or ten of them. Or
a hundred. Real change is within their grasp.

Because this isn't a problem like racism or sexism. It's simply
a problem of incentives. It won't take generations of relearning,
or the awakening of some kind of social awareness. It will simply
require making it make sense for politicians to opt into a different
system to fund their elections (as, for example, 80 percent of candi-
dates in Maine now do, and more than that in Connecticut). Nor is

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Conclusion 315

this a problem like cancer or AIDS. We know precisely what would
cure this problem, and we could produce that cure tomorrow. All it
would take is resources, and the imagination to recognize just how
far these resources could go to recovering this republic.

It wouldn't even have to be individuals. Think about the free-
dom now secured (mistakenly, in my view, but in war, you take
what you can get) by Citizens United.

I recently had the chance to hear Google's Eric Schmidt speak.
It was the first time I had seen him in a relatively intimate (and
hence serious) context. Schmidt was describing all the incredible
projects that Google was undertaking: world-changing technolo-
gies that anyone else would have thought impossible. There was a
certain imagination that defined each of these projects. An imagi-
nation that said, "You say it's impossible. Watch."

So I asked Schmidt about the subject of this book. I pointed to
the string of governmental policies that Google disagreed with,
from copyright to network neutrality to antitrust to immigration. I
suggested the obvious link to the corruption I have described here.
And I asked him if he thought Google could just ignore these differ-
ences, treating them like flies buzzing around a picnic, or if Google
would try to resolve the differences by pushing to get these poli-
cies changed.

For the first time that evening, a small idea was uttered by the
representative of this extraordinary company. Schmidt spoke of
invigorating the Google PAC, and pushing harder to get their side
of the issue better heard.

And I thought, Wow. This is a Google solution to this, the most
important problem facing this republic? This is the most they can
imagine?

For Citizens United has handed a company like Google an enor-
mous opportunity. We live in Google's infrastructure. Citizens
United means that the company is free to deploy that infrastructure
to political ends however it wishes. Indeed, given the failure of Con-
gress to mandate disclosure of independent expenditures, Google
could deploy its infrastructure to push particular political ends

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316 Conclusion

without even acknowledging it. A single decision by the powers
that be could ramp up a campaign to radically strengthen and make
more rational the way democracy functions. For almost nothing.

Tempting as these fantasies are, however, they are just fantasies.
We can't wait for some deus ex machina to save our republic. Our
republic is ours to save. Or better, it is only ours if we save it. It
won't be billionaires. It won't be geniuses with brilliant code. And
it certainly won't be politicians.

For our politicians are Yeltsin. Their problem is an addiction.
This magnificent republic melts away, and they can't stop them-
selves long enough to save it. They can't stop themselves because
they are being pulled in a way that they can't yet control. They are
being pulled, and they don't resist.

We all understand this pull. We all know addiction. There isn't a
person among us who hasn't suffered, or caused, Yeltsin's harm, if
only at the level of a family or among friends.

So think about that harm. Recognize its nature. Think about the
alcoholic and his plight. He might be losing his family, his job, and
his liver. Each of these is a critically important problem, indeed,
among the most important problems a person could face. But we
all recognize that to solve any of these "most important" problems,
he must solve his alcoholism first. It's not that alcoholism is the
most important problem. It's not. It is just the first problem.

So, too, with us. There is no end to the list of problems we as
a nation face. Whether big government or bad health care; com-
plicated taxes or global warming; a ballooning deficit or decaying
schools. But we won't solve these problems until we solve our first
problem first: a dependency that has corrupted the core of our
democracy. We can love the agents of that corruption. We can even
reelect them. But we must get them to change.

The only souls that can do this are citizens. Not politicians. Not
former politicians. Not wannabe politicians. But citizens. Indeed,
citizens who swear off elected politics.

For we need a politics that is not about politicians. We need a

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Conclusion 317

people who devote themselves to saving this republic without oth-
ers wondering whether they are simply trying to secure a job for
themselves. We need a way to engage that is not about just listen-
ing. We need to take responsibility for the government we ask the
politicians to run. We need to fix it, and then give it back to them
to run.

We citizens. You. Me. Us.

We need to launch a generation that stops simply hacking at the
branches of evil, to steal from Thoreau one last time, and learns
again to strike at the root. We need a generation of rootstrikers.

When Ben Franklin walked out of Independence Hall, the work
of the Constitutional Convention completed, he was stopped by a
woman and asked, "Mr. Franklin, what have you wrought?"

"A Republic, madam," Franklin replied, "if you can keep it."

A republic.

Meaning: "A representative democracy."

Meaning: A government "dependent upon the People alone."

We have lost that republic.

We must act to get it back.

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Acknowledgments

I am grateful to many for their generous help.

I was aided in the research by an army of scholars and some
soon-to-be lawyers, including Jennifer Campbell, Alissa Del Riego,
Dominic DeNunzio, Ronak Desai, Ryan Doerfler, Ann Donaldson,
Paul Dumaine, Jacob Eisler, Rachel Goldstein, Jeremy Haber, Lau-
ren Henry, Jason Iuliano, Rohit Malik, Randy Maas, Bryson Morgan,
Benjamin Sadun, Shaina Lee Trotta, and Chinh Vo. Matthew Wans-
ley helped organize that army and did exceptional work on his own
for an extended period.

My understanding of these issues was also affected substantially
by students in four corruption seminars that I taught, two at Stan-
ford, one at Harvard, and one at the University of Cincinnati. Paul
Gowder helped me pull together the first of these seminars. Joel
Hyatt co-taught the second at Stanford and has guided my thinking
and work here substantially.

Michael Nelson, Michael Powell, Larry Pressler, and Ken Silver-
stein offered insights in a series of interviews. Mark McKinnon,
Trevor Potter, and Nick Allard helped introduce the world of lob-
bying, as well as others less eager to be named. David Post showed
me Jefferson on corruption. Zephyr Teachout's work about the
Framers generally has been essential to my own. I am grateful to
her, and eager to read her forthcoming book, Benjamin Franklin's
Snuff Box (to be published in 2012).

Help with ideas and references was also provided by a wide
range of Tweeps, including ©JMHeggen, ©EDUCAUSEeq, @gfish,
@mrtnzlngr, ©bobblakley, @bobblakley, @heydan, ©dlnorman,
@xtl, and @dclauzel.

319

RepublicLost_HCtextFl.indd 319 {g} 8/23/11 1:19:52 AM

320 Acknowledgments

Without the program Freedom (macfreedom.com), this book
would not have been completed.

Early drafts of the manuscript were read by a wide range of
colleagues and friends, including Eric Beerbohm, John Coates,
Congressman Jim Cooper, Stephen Erickson, Chris Hayes, Judge
Richard Posner, Susannah Rose, Alex Whiting, Tim Wu, and Jon-
athan Zittrain. Congressman Cooper's writing deserves special
note. I have never received harsher comments on anything I have
written. The criticism was valuable and correct, but I am especially
grateful for the integrity it represents.

I presented a draft of part of this work at the Yale Legal Theory
Workshop, and the Edmond J. Safra Center for Ethics Faculty Work-
shop.

Jef Pollock of Global Strategy Group provided survey research
about attitudes toward Congress. MapLight helped frame a set
of the influence data. Except where noted, Jin Suk designed the
graphics that appear in the text.

None of this work would have been possible without the end-
less support of the Edmond J. Safra Center for Ethics, and Lily Safra
especially. Nor without Szelena Gray, who has lent me her enor-
mous talent. I am endlessly grateful to her, for her, and for her work.

This book is dedicated to "the million Arnold Hiatts this rev-
olution will need." That includes, of course, Hiatt himself. It also
includes an extraordinary collection of the believers in this cause
who have taught me most everything I know about the issue and
the challenge it presents: David Donnelly, Ellen Miller, Daniel New-
man, Nick Nyhart, John Rauh, Micah Sifry, Josh Silver, and Daniel
Weeks. I am also thankful to the amazing team that helped build
Change Congress, Fix Congress First, and now Rootstrikers, includ-
ing Monica Walsh, Japhet Els, Aason Swartz, Adam Green, Stepha-
nie Taylor, friends at Blue State Digital, and now Joey Mornin. I am
especially grateful to the funders of those organizations, includ-
ing especially Marc Andreesen, Matt and Cindy Cutts, Mike Klein,
Kathleen McGrath and J. J. Abrams, David Mills, Dan Nova, Debo-
rah Salkind, Richard Senn, Jonathan and Jennifer Soros, and the

RepublicLost_HCtextFl.indd 320 {g} 8/23/11 1:19:52 AM

Acknowledgments

321

thousands of others who offered whatever they could to make
change possible.

No dedication, however, could rightly acknowledge the sacri-
fice this work has forced on those I love most, Bettina and my three
kids, Willem, Teo, and Tess. However important this issue is, it is as
nothing compared to them.

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RepublicLost_HCtextFl.indd 322 {g} 8/23/11 1:19:52 AM

Appendix

What You Can Do, Now

This is not a book about changing Congress written by a candidate
for Congress. I promise (and indeed, have promised my first child
if I break that promise). As I've described, this book is a call for a
politics without politicians. That means we need a way to motivate
citizens that doesn't in the end connect to some campaign for some
important national office. It needs to be about ideals, or principles,
not about a person and his or her inevitable flaws.

That campaign begins by spreading a certain kind of under-
standing, a recognition of how a wide range of issues get affected
by one common influence: campaign cash. The group I helped
start, Rootstrikers.org, works to spread that recognition by ask-
ing supporters to tag stories that evince this connection, and help
spread those stories to as many souls as possible.

These stories sometimes simply present themselves: journalists,
encouraged in part by fantastic resources provided by groups such
as OpenSecrets.org, FollowTheMoney.org, OpenCongress.org, and
MapLight, are increasingly including references to the obvious issue
of campaign funding as they describe almost every issue of public
policy.

But the stories sometimes require people to connect the dots.
Rootstrikers.org asks citizens to help others see the connection,
and spread this understanding. It also asks people from many dif-
ferent political perspectives to contribute to this common under-
standing. I recognize that the issues that upset friends on the Right

323

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324 Appendix: What Tou Can Do, Now

will upset me less, and vice versa. But if we can begin to see that
there is a common root, we might begin to address that common
root.

So the first most important thing that you can do is to make it a
practice to point: Whenever you see a money-in-politics story, tag
it on Twitter with #rootstrikers. Or add it to Rootstrikers.org, and
ask others to comment. Or put it on your Facebook wall or, ideally,
your blog. Describe it in a way that helps others understand the
issue. Help build a constant campaign driven by citizens to educate
all of us about this issue.

The understanding that will grow from this grass-roots effort
must then manifest itself in specific organizations driving for spe-
cific reforms. I've described my own preferred reform. But the most
prominent recent example of reform like this was the effort to enact
the Fair Elections Now Act. PublicCitizen.org, PublicCampaign.org,
and CommonCause.org were the most engaged and effective orga-
nizations pushing to enact that act. They continue to push politi-
cians to sign the Voters First Pledge at VotersFirstPledge.org.

These groups have inspired a new organization, which launched
in the summer of 2011. The Fund for the Republic (Fundforthe
Republic.org) promises to gather a politically diverse mix of rich
people who commit to spending a great deal of their wealth to
reform this system. Of all the organizational developments that
have happened, this is among the most promising, as the Fund for
the Republic is led by one of the very best organizers in this field,
and has the potential to rally a great deal of support.

The second most important thing you can do is to demand that
candidates for Congresss take a pledge to support small-dollar-
funded campaigns. Whenever they speak publicly, get this ques-
tion asked. Only by making this issue a constant focus of campaigns
will we get enough representatives to commit to doing something
about it. Let there never be another public meeting of a congress-
man or a candidate for Congress without this question asked, and
asked again. And when it is asked, record it and post it on YouTube
or blip.tv or Vimeo, and point us and others to the response.

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Appendix: What Tou Can Do, Now 325

For the Internet is the only tool we can rely upon just now. For
at least the next five years, it will be the one tool that gives grass-
roots movements an edge. You can be confident that this medium,
too, will evolve. That soon it will feel as professional as magazine
ads or television commercials. But for now there is enormous cred-
ibility that comes from authentic engagement. We can build that
engagement, one click at a time.

There is also important work to do now to support the idea
of a convention. Most important immediately is to push for mock
conventions. You can find out how to support a mock convention
at CallAConvention.org. These mock conventions, I believe, will
begin to show Americans that we're not so dumb. That, in fact,
the work we do as amateurs to reform this democracy is much bet-
ter than the work the professionals do. If there were five hundred
mock conventions in the next four years, there would be a strong
national movement to support a constitutional convention. In the
end, I confess, this may be the only real path to reform. We should
educate the people to practice it well.

Finally, there is critical work to be done now to build under-
standing across the insane political divide that defines poli-
tics in America today. There are entities whose business model
depends upon dividing us: Fox News, MSNBC, the Tea Party,
BoldProgressives.org. But the souls who are fans of each of these
extraordinary institutions must begin to see that we are more
than these institutions allow us to be. However far from my views
a member of the Tea Party is, we still agree about certain funda-
mentals: that it is a republic we have inherited; that it ought to be
responsive to "the People alone"; that this one is not.

This isn't just a hypothesis for me. I've seen it firsthand. I stood
in the middle of a national Tea Party convention. I recognized
the people around me. They may not have agreed with me about
gay rights. I don't know if they did, for their convention was not
focused on that kind of issue. We certainly didn't agree about taxes
or the need to "end government regulation." But we were united in
the view that this republic can do better.

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326

Appendix: What Tou Can Do, Now

We need to remember how different our forebears were. Two
hundred-plus years later, they all look the same to us. But they had
very different values and radically different ideas about what their
republic should be.

They put those differences aside, and saved their nation from
ruin. We must do the same. Not after the next election. Now.

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Notes

Throughout these notes there are references to links (e.g., "link
#23") on the Web. As anyone who has used the Web knows, these
links can be highly unstable. I have tried to address this instabil-
ity by redirecting readers to the original source through the web-
site associated with this book. For each link below, you can go to
Republic.Lessig.org and locate the original source. If the original
link remains alive, you will be redirected to that link. If the original
link has disappeared, you will be redirected to a cached copy of the
original source. I have used the wonderful resource WebCitation
.org to store the cached version.

Introduction

1. "Congress Ranks Last in Confidence in Institutions," July 22, 2010, available at link #1,

2. Ronald J. Pestritto and William J. Atto, American Progressivism: A Reader (Lan-
ham, Md.: Lexington Books, 2008), 40-41, quoting "Who Is a Progressive," April
1912 speech, reprinted in Outlook 100, April 1912.

3. Richard L. McCormick, "The Discovery That Business Corrupts Politics: A Reap-
praisal of the Origins of Progressivism," American Historical Review 86 (1981):
247, 270. There is some contest among historians about how new this awareness
was. Richard Hofstadter, for example, argues "there was nothing new." But as
McCormick powerfully describes, there was much about the mechanism to the
emerging type of corruption that was not understood generally, or broadly. And
when it was understood, it sparked a powerful political response. Ibid., 265. Begin-
ning in 1906, "both major parties gushed in opposition to what the Republicans
now called the domination of corporate influences in public affairs.' " Ibid., 263.

4. Jeffrey H. Birnbaum, The Money Men: The Real Story of Fund-raising's Influence
on Political Power in America (New York: Crown Publishers, 2000), 29. See also
the extremely compelling account by Jack Beatty in Age of Betrayal (New York:
Vintage, 2007).

5. Pestritto and Atto, American Progressivism, 215, quoting Roosevelt's "The New
Nationalism," Oct. 1910.

6. McCormick, "The Discovery that Business Corrupts Politics," 247, 265.

7. Speech of Theodore Roosevelt, April 14, 1906, available at link #2.

327

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328

Notes

8. John Joseph Wallis, "The Concept of Systematic Corruption in American History,"
in Edward Glaeser and Claudia Goldin, eds., Corruption and Reform (Chicago:
University of Chicago Press, 2006), 21 and 23, available at link #3-

Professor Michael Johnston is the dean of corruption studies. His Syndromes
of Corruption (2005) captures better the dynamic of corruption that I am describ-
ing. While his work is comparative, and addresses the full range of corruption,
including quid pro quo corruption, the mechanism he describes in a number of
nations is close to the conception of "dependence corruption" described later.

Chapter 1. Good Souls, Corrupted

1. The first prominent reports of Yeltsin's drunkenness came from a trip to the
United States in 1989- Those reports were later discredited, including by the U.S.
reporter who first reported them. Leon Aron, Yeltsin: A Revolutionary Life (New
York: St. Martin's, 2000), 324, 344-48.

2. Taylor Branch, The Clinton Tapes (New York: Simon and Schuster, 2009), 56.

3. Ibid., 198.

4. See e.g., "The Scientific Basis of Influence and Reciprocity: A Symposium," June
12, 2007, Washington, D C. (Association of America's Medical Colleges).

5. Dennis Thompson's work goes the furthest in distinguishing institutional from
individual corruption. His conception of institutional corruption, however, is
more strongly tied to private interest than my own. See "Two Concepts of Cor-
ruption," 12, n il (Paper presented at an E. J. Safra Lab workshop, Nov. 2010). In
my view, if an institution has an intended dependency, we should be able to call
deviation from that dependency "corruption," regardless of whether or not it is
motivated by private interest. Dependency corruption as I describe it later thus
violates the independence of an institution. But not only because it "tend[s] to
promote private interests." Ibid., 2.

6. As will become clear in the balance of this book, the term dependence corrup-
tion describes the process of governance. It doesn't point to a particular tainted
result. It is thus distinct from the three end-state types of corruption described by
Burke, quid pro quo, monetary influence, and distortion, in the sense that it could
exist even if there were none of these three end-state corruptions present. See
Thomas F. Burke, "The Concept of Corruption in Campaign Finance Law," Consti-
tutional Commentary 14(1997): 127, 131.

7. See Godfrey Davies, "Charles II in 1660," Huntington Library Quarterly 19
(1956): 245, 254-55. ("For about two years, 1654 to 1656, Charles lived at Cologne,
in moderate comfort so long as the French paid him a pension.") See also Clyde
L. Grose, "Louis XIV's Financial Relations with Charles II and the English Parlia-
ment," Journal of Modern History 1 (1929): 177, 204.

8. As Pierce Butler described at the convention, "A man takes a seat in parliament to get
an office for himself or friends, or both; and this is the great source from which flows
its great venality and corruption." Notes of Robert Yates (J une 22 , 1787), in Records of
the Federal Convention of 1787, vol. 1, ed. Max Farrand, 1966, 379, quoting Butler.

Chapter 2. Good Questions, Raised

1. Nena Baker, The Body Toxic (New York: North Point Press, 2008), 153.

2. Ibid., 142.

RepublicLost_HCtextFl.indd 328

8/23/11 1:19:52 AM

Notes 329

3. Ibid.

4. House of Representatives, Congress of the United States, Committee on Energy
and Commerce (2009).

5. Denise Grady, "In Feast of Data on BPA Plastic, No Final Answer," New York
Times, Sept. 6, 2010, Dl, available at link #4.

6. Baker, The Body Toxic, 155, quoting Pete Mayers.

7. Grady, "In Feast of Data on BPA Plastic."

8. Baker, The Body Toxic, 142.

9. Trevor Butterworth, "Science Suppressed: How America Became Obsessed with
BPA," Statistical Assessment Service, June 12, 2009, available at link #5. See also
Gina Kolata, "Flaws in the Case Against BPA," New York Times, June 30, 2009,
posted to TierneyLab, available at link #6.

10. "Spin the Bottle," Harper's, Dec. 2009, at link #7.

11. Baker, The Body Toxic, 144.

12. Ibid.

13. Ibid.

14. Kevin Stein et al., "Prevalence and Sociodemographic Correlates of Beliefs Regard-
ing Cancer Risks," Cancer 110 (2007): 1141, available at link #8.

15. The most significant biologic effect here is damage to DNA. As Devra Davis writes,
the "first time anyone had seen direct evidence that cell-phone-type radiation
adversely affected DNA" was 1994. Devra Davis, Disconnect: The Truth About
Cell Phone Radiation, What the Industry Has Done to Hide It, and How to Pro-
tect Your Family (New York: Dutton Adult, 2010), 229- Since then there have
been many other studies, including an "extraordinary review" that concluded
"cell phone radiation does damage DNA."

16. Frank Jordans, "Study on Cell Phone Link to Cancer Inconclusive," available at
link #9- The World Health Organization's International Agency for Research on
Cancer (IARC) recently concluded that the radio frequency used by cell phones
is possibly carcinogenic. See Press Release No. 208, May 31, 2011, available at
link #10.

17. Ibid.

18. Ibid.

19. Davis, Disconnect, 229-

20. Anke Huss, Matthias Egger, Kerstin Hug, Karin Huwiler-Miintener, and Martin
Roosli, "Source of Funding and Results of Studies of Health Effects of Mobile
Phone Use: Systematic Review of Experimental Studies," Environmental Health
Perspectives 115 (2007): 1, 3.

21. Ibid.

22. See generally Dennis F. Thompson, "Understanding Financial Conflicts of Inter-
est," New England Journal of Medicine 329 (1993): 573; "Conflicts of Interest,"
Responsible Conduct of Research, available at link #11 (last visited June 21, 2011);
Michael McDonald, "Ethics and Conflict of Interest," The W. Maurice Young Cen-
ter for Applied Ethics (Oct. 21, 2007), available at link #12.

23. For a related analysis in the context of public health research, see Katherine A.
McComas, "The Role of Trust in Health Communication and the Effect of Con-
flicts of Interest Among Scientists," Proceedings of the Nutrition Society 67
(2008): 428n, available at link #13.

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330 Notes

24. Robert C. Brooks, Corruption in American Politics and Life (New York: Dodd,
Mead and Company, 1910), 93.

25. Dennis F. Thompson, Ethics in Congress: From Individual to Institutional Cor-
ruption (Washington, D.C.: The Brookings Institution, 1995), 124.

26. I don't mean to suggest that this is an easy question to answer. This is the les-
son of Peter Morgan and Glenn Reynolds's powerful book, The Appearance of
Impropriety (New York: Free Press, 1997). In example after example, Morgan and
Reynolds demonstrate the political system's inability to distinguish real from fabri-
cated political conflicts. This problem will only grow as the political environment
becomes more poisonous. I don't pretend to offer any solution to bad faith, though
as I emphasize in "Against Transparency" (New Republic, Oct. 9, 2009), the most
obvious solution is to eliminate the suggestion that there may be a conflict.

27. Florence T. Bourgeois, Srinivas Murthy, and Kenneth D. Mandl, "Outcome Report-
ing Among Drug Trials Registered in ClinicalTrials.gov," Annals of Internal Medi-
cine 153 no. 3 (Aug. 3, 2010): 158-66, 159, available at link #14.

28. Eli Pariser, The Filter Bubble: What the Internet Is Hiding from You (forthcom-
ing, New York: Penguin Press, 2011), 28.

29. Top 1000 Sites— Doubleclick Ad Planner, available at link #15. The $ 150 million is
calculated as follows: $1 per thousand page views, an estimated fourteen billion
page views per month, times twelve months is at least $150 million.

30. Interview with author, May 4, 2007.

31. "Therefore I Travel, Company Profile of Lonely Planet," Tony Wheeler, Lonely
Planet, available at link #16.

32. Adam Smith, The Wealth of Nations, vol. 1, ed. Edwin Cannan (Chicago: Univer-
sity of Chicago Press, 1976), 477 (book IV, chapter II: "Of Restraints upon the
Importation from foreign Countries of such Goods as can be produced at Home").

Chapter 3. 1 + 1 =
1. Paul Krugman, "Boiling the Frog," Neiv York Times, July 13, 2009, at A19-

Part II. Tells

1. Marc J. Hetherington, Why Trust Matters: Declining Political Trust and the
Demise of American Liberalism (Princeton, N.J.: Princeton University Press,
2005), 9.

Chapter 4. Why Don't We Have Free Markets?

1. Karl Weber, ed., Food, Inc.: How Industrial Food Is Making Us Sicker, Fatter,
and Poorer — and What You Can Do About It (New York: Public Affairs Press,
2009), 228-29; Centers for Disease Control and Prevention, National Diabetes
Fact Sheet (2007), 10-11, available at link #17.

2. Neil H. White, "Obesity, Type 2 Diabetes Rates Growing Rapidly Among Chil-
dren," Washington University in St. Louis (website), Mar. 11, 2005, available at
link #18 ("In 1985, experts estimated that about 1 to 2 percent of children with
diabetes had Type 2").

3. Thomas Frieden, William Dietz, and Janet Collins, "Reducing Childhood Obesity
Through Policy Changes: Acting Now to Prevent Obesity," Health Affairs 29, no.
3 (2010): 357-63, cited in Ellen-Marie Whelan, Lesley Russell, and Sonia Sekhar,

RepublicLost_HCtextFl.indd 330

8/23/11 1:19:52 AM

Notes 331

Confronting America's Childhood Obesity Epidemic: How the Health Care
Reform Law Will Help Prevent and Reduce Obesity, Center for American Prog-
ress, 2010, 1.

4. See Centers for Disease Control and Prevention, National Diabetes Fact Sheet 8
(2007).

5. Whelan, Russell, and Sekhar, "Confronting America's Childhood Obesity Epi-
demic."

6. Heidi Adams, "Obesity in America: One Nation, Overweight," Oct. 31, 2008, avail-
able at link #19- See also "Reason for Increase in Number of Children with Type
2 Diabetes," MSN Health Network, July 28, 2008, available at link #20. See also
"Type 2 Diabetes in Children and Adolescents," Consensus Statement, Diabetes
Care 23, no. 3 (2000): 381-89.

7. National Center for Health Statistics, "Prevalence of Overweight, Obesity, and
Extreme Obesity Among Adults: United States, Trends 1976-80 through 2005-
2006" (2008), 3, available at link #21.

8. National Center for Health Statistics, "Health, United States, 2009: With Special
Feature on Medical Technology" (2009), 303, available at link #22.

9. Eric A. Finkelstein et al., "Annual Medical Spending Attributable to Obesity: Payer-
And Service-Specific Estimates," Health Affairs 28 (2009): 822.

10. Dana E. King et al., "Adherence to Healthy Lifestyle Habits in US Adults, 1988-
2006," American Journal of Medicine 122 (2009): 528, 530.

11. James E. Tillotson, "Food Brands: Friend or Foe?" Nutrition Today (March-April
2002): 78, 79.

12. For this dynamic described, see David Kessler, The End of Overeating (New
York: Rodale, 2009), 12.

13- Michael Pollan, The Omnivore's Dilemma (New York: Penguin Press, 2006), 104.

14. Ibid., 103-4.

15. Sarah Kate Coleman, "The Facts About High Fructose Corn Syrup," Jan. 13, 2010,
available at link #23-

16. James Bovard, "Archer Daniels Midland: A Case Study in Corporate Welfare," Cato
Policy Analysis, Cato Institute (1995), 1, available at link #24.

17. Ibid.

18. Kenneth Bailey, "Congress's Dairy Dilemma," Regulation (Winter 2001): 32.
There were eleven. There now are ten. See U.S. Dep't of Agric, Econ. Res. Serv.,
Dairy: Policy (2009), available at link #25. See also Jasper Womach, "Agriculture:
A Glossary of Terms, Programs, and Laws," Cong. Research Serv. Report for Con-
gress, No. 97-905 (2005): 165, available at link #26.

19- Charles Lewis and the Center for Public Integrity, The Buying of the Congress
(New York: Avon Books, 1998), 227.

20. Larry Rohter, "Brazil's Shrimp Caught Up in a Trade War," New York Times, March
10, 2004. The government had found "dumping." Mark Drajem, "U.S. Sets Shrimp
Tariffs on Thailand, India, Ecuador, Brazil," Bloomberg (July 29, 2004), available
at link #27.

21. Chana Joffe-Walt, "Why U.S. Taxpayers Are Paying Brazilian Cotton Growers,"
NPR, All Things Considered, Nov. 9, 2010, available at link #28.

22. David E. Sanger, "Dole at Forefront of Trade Battle to Aid Donor's Banana Empire,"
New York Times, Dec. 5, 1995, at Al, B9.

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332 Notes

23. Brian M. Riedl, "Agriculture Lobby Wins Big in New Farm Bill," Backgrounder No.
1534, Heritage Foundation (April 9, 2002), available at link #29.

24. Press Release, White House, "President Announces Temporary Safeguards for
Steel Industry" (Mar. 5, 2002), available at link #30. See also "Counting the Cost
of Steel Production: Hearing Before the Subcomm. on Trade of the H. Comm. on
Ways and Means, 106th Cong." (1999) (statement of Daniel Griswold, Cato Inst ),
available at link #31.

25. Brink Lindsey, Mark Groombridge, and Prakash Loungani, "Nailing the Home-
owner: The Economic Impact of Trade Protection of the Softwood Lumber Indus-
try," Trade Pol'y Analysis no. 11, Cato Inst. Quly 6, 2000), available at link #32.

26. Raghuram Rajan and Luigi Zingales, Saving Capitalism from the Capitalists
(New York: Crown Business, 2003), 230.

27. Brian M. Riedl, "Seven Reasons to Veto the Farm Bill," Backgrounder No. 2134,
Heritage Foundation (May 12, 2008), 1-2, available at link #33.

28. Brian M. Riedl, "How Farm Subsidies Harm Taxpayers, Consumers, and Farmers,
Too," Backgrounder No. 2043, Heritage Foundation (June 20, 2007), 8.

29. Ibid., 8-9. The subsidies here are for the period 1995-2005.

30. Rajan and Zingales, Saving Capitalism from the Capitalists, 229-30.

31. Jason Lee Steorts, "The Sugar Industry and Corporate Welfare," Review, July 18,
2005, available at link #34. See also "Sugar Manufacturing Industry Profile," First
Research (2011).

32. Bovard, "Archer Daniels Midland"; Chris Edwards, "Agricultural Regulations and
Trade Barriers Downsizing the Federal Government," available at link #35.

33. See World Wildlife Foundation Global Freshwater Program, "Sugar and the Envi-
ronment: Encouraging Better Management Practices in Sugar Production" (2005),
9, available at link #36.

34. James Bovard, "The Great Sugar Shaft," The Future of Freedom Foundation, Free-
dom Daily (April 1998), available at link #37.

35. Int'l Trade Admin., U.S. Dep't Com., Employment Changes in U.S. Food Manufac-
turing: The Impact of Sugar Prices (2006), 2.

36. Bovard, "The Great Sugar Shaft."

37. Daniel J. Ikenson, "America's Credibility Goes Timber! ' " Free Trade Bulletin
(2005), available at link #38.

38. Edwards, "Agricultural Regulations and Trade Barriers Downsizing the Federal
Government," 8.

39- United States Corn Subsidies, EWG Farm Subsidy Database, available at link #39;
Donald Carr, "Corn Subsidies Make Unhealthy Food Choices the Rational Ones,"
Grist, Sept. 21, 2010, available at link #40.

40. Pollan, The Omnivore's Dilemma, 48-53; Elanor Starmer and Timothy A. Wise,
"Feeding at the Trough: Industrial Livestock Firms Saved $35 Billion from Low
Feed Prices," 07-03 Global Development and Environment Institute Policy Brief 2
(2007), available at link #41. ("Factory hog operations saw the price of feed drop
to 26% below production costs during the 1997-2005 period.")

41. Elanor Starmer and Timothy A. Wise, "Living High on the Hog: Factory Farms,
Federal Policy, and the Structural Transformation of Swine Production," Global
Development and Environment Institute Working Paper 07-04 (2007), 1, 3. A sec-
ond factor they point to is lax enforcement of environmental rules.

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8/23/11 1:19:52 AM

Notes 333

42. Ibid.

43. "Food and Water Watch, Another Take: Food Safety Consequences of Factory
Farms," in Weber, ed., Food, Inc. In May 2011, a coalition of environmental groups
filed suit against the FDA to force it to enforce its own findings about the dangers
from routine antibiotic use. Tom Laskawy, "Groups Sue FDA to Stop Big Ag Antibi-
otic Abuse— and It Just Might Work," Grist, May 26, 2011, available at link #42.

44. Pollan, The Omnivore's Dilemma, 74, 78-79; Weber, ed., Food, Inc. See also
Donald Kennedy, "Cows on Drugs," Neiv York Times, April 18, 2010, available at
link #43.

45. Pew Commission on Industrial Farm Animal Production, "Putting Meat on the
Table: Industrial Farm Animal Production in America" (2008), 13, available at link
#44 ("Food-borne pathogens can have dire consequences when they do reach
human hosts. A 1999 report estimated that E. Coli 0157:H7 infections caused
approximately 73,000 illnesses each year, leading to over 2,000 hospitalizations

and 60 deaths each year in the United States Costs associated with E. Coli

0157:H7- related illnesses in the United States were estimated at $405 million
annually: $370 million for deaths, $30 million for medical care, and $5 million for
lost productivity. . . .Animal manure, especially from cattle, is the primary source
of these bacteria, and consumption of food and water contaminated with animal
wastes is a major route of human infection. Because of the large numbers of ani-
mals in a typical IFAP [International Federation of Agricultural Producers] facility,
pathogens can infect hundreds or thousands of animals even though the infection
rate may be fairly low as a share of the total population. In some cases, it may
be very difficult to detect the pathogen; Salmonella enterica [SE], for example,
is known to colonize the intestinal tract of birds without causing obvious dis-
ease, . . . although the infected hen ovaries then transfer the organism to the egg
contents. Although the frequency of SE contamination in eggs is low (fewer than
1 in 20,000 eggs), the large numbers of eggs — 65 billion — produced in the United
States each year means that contaminated eggs represent a significant source for
human exposure." Citations omitted.)

46. The three-year-old's story is told in Food, Inc. The dance instructor's, in Michael
Moss, "The Burger That Shattered Her Life," New York Times, Oct. 3, 2009, Al,
available at link #45.

47. A Cato Institute study estimated that it took seven barrels of oil to produce
eight barrels of corn-derived ethanol. The Monitor's View, "Corn Lobby's Tall Tale
of a Gas Substitute," Christian Science Monitor, May 12, 2006, available at link
#46.

48. Bovard, "Archer Daniels Midland."

49- Coalition for Balanced Food and Fuel, "Expert Economist Says National Ethanol
Policy Continuing to Drive Meat and Poultry Prices Higher" (2008), available at
link #47. See also Thomas E. Elam, "Biofuel Support Policy Costs to the U.S. Econ-
omy" (2008), 3, available at link #48.

50. Federal Priorities Project, Federal Priorities Database, available at link #49-

51. Center for Responsive Politics, OpenSecrets.org, "Sugar Cane and Sugar Beets:
Long-Term Contribution Trends," available at link #50.

52. Center for Responsive Politics, OpenSecrets.org, "Crop Production & Basic Pro-
cessing: Long-Term Contribution Trends," available at link #51.

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334 Notes

Chapter 5. Why Don't We Have Efficient Markets?

1. Copyright Office, Copyright Law of the United States and Related Laws Contained
in Title 17 of the United States Code vi-x (2009), available at link #52.

2. U.S. Energy Information Administration, "Emissions of Greenhouse Gases Report
2008" (Dec. 2009), 24, available at link #53.

3. Robert N. Stavins and Kenneth Richards, "The Cost of U.S. Forest Based Carbon
Sequestration," Pew Center on Global Climate Change (2005), ii, available at link
#54; David Biello, "Future of Clean Coal' Power Tied to (Uncertain) Success of
Carbon Capture and Storage," Scientific American, March 14, 2007, available at
link #55; Center for American Progress, "ACCCE Company Profits," available at
link #56. Profit of Coal and Petroleum industry as reported in U.S. Industry Quar-
terly Review: Energy 30 (Global Insight Inc., 2004).

4. Conrad Schneider and Jonathan Banks, "The Toll from Coal," Clean Air Task
Force, Sept. 2010, 4, 10, available at link #57.

5. According to MapLight, coal-mining companies and employees contributed
$2,344,731 to legislators from the top five coal-producing states (Wyoming, West
Virginia, Kentucky, Pennsylvania, and Montana) between 2005 and 2010. One-
third of that sum went to twenty-five Democrats.

6. Center for Responsive Politics, OpenSecrets.org, "Pro-Environment Groups
Outmatched, Outspent in Battle over Climate Change Legislation," available at
link #58.

7. See OpenSecrets.org. Data aggregates campaign and lobbying expenditures for
"Print & Publishing" (see links #32 and #33) plus "TV/Movies/Music" (see links
#34 and #35) versus campaign and lobbying expenditures for Public Knowledge,
Open Internet Coalition, Digital Future Coalition, and the National Humanities
Alliance (links #36 and #37) and (links #38 and $39).

Chapter 6. Why Don't We Have Successful Schools?

1. Jessica Shepherd, "World Education Rankings: Which Country Does Best at Read-
ing, Maths and Science? " Guardian, Dec. 7, 2010, available at link #59-

2. This claim is not uncontroversial. Vivek Wadhwa argues, for example, that the
statistics fail to take into account critical thinking skills and innovation, see
Vivek Wadhwa, "U.S. Schools Are Still Ahead — Way Ahead," Businessweek, Jan.
12, 2011, available at link #60; and Diane Ravitch points out that a 1991 report
argued that the U.S. education system had been "stead[ily] improving." See Diane
Ravitch, "Is U.S. Education Better Than Ever?" Huffington Post (Dec. 5, 2007),
available at link #61, (referring to C. C. Carson, R. M. Huelskamp, and T. D. Wood-
all, "Perspectives on Education in America: An Annotated Briefing," Journal of
Education Research 86 [May 1993]: 259). But the OECD's Programme for Inter-
national Student Assessment (PISA), an international survey conducted in 2000,
2003, 2006, and 2009, reports that the United States is worse off than in 2000
as compared to other nations. And according to the National Assessment of Edu-
cational Progress (NAEP), the U.S. reading and math performance has remained
largely flat since the early 1970s. See National Center for Education Statistics,
"Trend in NAEP Reading Average Scores for 17-year-old Students" (2008), available
at link #62 (documenting change in average scaled reading score of 285 in 1971
to 286 in 2008); National Center for Education Statistics, "Trend in Mathematics

RepublicLost_HCtextFl.indd 334

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Notes 335

Average Scores for 17-year-old Students" (2008), available at link #63 (document-
ing change in average scaled mathematics score of 304 in 1973 to 306 in 2008).

3. William Dobbie and Roland G. Fryer, Jr., "Are High-Quality Schools Enough to
Close the Achievement Gap? Evidence from a Bold Social Experiment in Harlem,"
Harvard University (2009), available at link #64. See also David Brooks, "The Har-
lem Miracle," New York Times, May 7, 2009, at A31, available at link #65.

4. Eric A. Hanushek, "Teacher Deselection," in Creating a New Teaching Profes-
sion, Dan Goldhaber and Jane Hannaway, eds. (Washington, DC: Urban Institute
Press, 2009), 168, 172, 173.

5. See Steven G. Rivkin, Eric A. Hanushek, and John F. Kain, "Teachers, Schools,
and Academic Achievement," Econometrica 73 (Mar. 2005): 417, available at link
#66 (measuring the importance of effective teachers), and Scholastic and Bill &
Melinda Gates Foundation, "Primary Sources: America's Teachers on America's
Schools" (2010), available at link #67 (same); William Dobbie and Roland G. Fryer,
Jr., "Are High-Quality Schools Enough to Close the Achievement Gap? Evidence
from a Bold Social Experiment in Harlem" (2009), available at link #64 (evaluat-
ing effectiveness of Harlem Children's Zone program); Joshua D. Angrist, Susan
M. Dynarski, Thomas J. Kane, Parag A. Pathak, and Christopher R. Walters, "Who
Benefits From KIPP?" NBER working paper (2010), available at link #68 (evaluat-
ing effectiveness of KIPP Academy); Martha Abele, Mac Iver, and Elizabeth Farley-
Ripple, "The Baltimore KIPP Ujima Village Academy, 2002-2006: A Longitudinal
Analysis of Student Outcomes," Center for Social Organization of Schools, Johns
Hopkins University (2007), available at link #69 (same).

6. See the resources at Ounce of Prevention, Publications, available at link #70.

7. Center for Responsive Politics, OpenSecrets.org, Teachers' Unions: Long-Term
Contribution Trends, available at link #71; Center for Responsive Politics,
OpenSecrets.org, Democrats for Education Reform Expenditures, 2010 Cycle,
available at link #72; Center for Responsive Politics, OpenSecrets.org, Democrats
for Education Reform Expenditures, 2008 Cycle, available at link #73; Center for
Responsive Politics, OpenSecrets.org, Democrats for Education Reform Expendi-
tures, 2006 Cycle, available at link #74.

Chapter 7. Why Isn't Our Financial System Safe?

1. My claim is not that the failures I describe in this chapter were the most impor-
tant cause of the economic collapse, or even that properly handled, they would
have avoided the economic collapse. Certainly the biggest drivers beyond the low
interest rates were the trade imbalance and currency distortions with foreign
trading partners. Jeffrey A. Frieden and Menzie D. Chinn, Lost Decades: The Mak-
ing of America's Debt Crisis and the Long Recovery (forthcoming: Sept. 2011).
But the argument here is about the rationality of this part of our financial policy,
however significant this part is.

2. David Moss, "Reversing the Null: Regulation, Deregulation, and the Power of
Ideas," Harvard Business School Working Paper, No. 10-080, Oct. 2010, 3, avail-
able at link #75. This graph was derived from Moss's more extensive original with
permission from the author.

3. David Moss, "An Ounce of Prevention: Financial Regulation, Moral Hazard, and
the End of Too Big to Fail,' " Harvard Magazine (Sept.-Oct. 2009): 25.

RepublicLost_HCtextFl.indd 335

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336 Notes

4. See Richard A. Posner, The Crisis of Capitalist Democracy (Cambridge, Mass.:
Harvard University Press, 2010); and Richard A. Posner, A Failure of Capitalism:
The Crisis of '08 and the Descent into Depression (Cambridge, Mass.: Harvard
University Press, 2009).

5. Posner, The Crisis of Capitalist Democracy, 169-

6. These are described generally in David Moss, "An Ounce of Prevention," 25. See
also Jacob S. Hacker and Paul Pierson, Winner-Take-All Politics: How Washing-
ton Made the Rich Richer and Turned Its Back on the Middle Class (New York:
Simon and Schuster, 2010), 68.

7. Financial Crisis Inquiry Commission, Financial Crisis Inquiry Report (2011), 45,
available at link #76.

8. Here, too, technology was critical. Technology not only enabled the crafting of
complex mortgage-backed securities, but it also allowed mortgage lenders to lend
on the basis of a portfolio of borrowers rather than the judgment about the credit-
worthiness of one borrower at a time. See, e.g., William R. Emmons and Stuart
I. Greenbaum, "Twin Information Revolutions and the Future of Financial Inter-
mediation," in Y. Amihud and G. Miller, eds., Mergers and Acquisitions (1998),
37-56; and Mitchell Petersen and Raghuram G. Rajan, "Does Distance Still Matter?
The Information Revolution in Small Business Lending," Journal of Finance 57
(Dec. 2002): 2533-70.

9. Frank Partnoy, Infectious Greed: How Deceit and Risk Corrupted the Financial
Markets (New York: Times Books, 2003), 110-13. The crisis was caused when the
Fed surprised markets by raising interest rates.

10. Ibid., 145.

11. Gillian Tett, Fool's Gold: How the Bold Dream of a Small Tribe at J. P. Morgan
Was Corrupted by Wall Street Greed and Unleashed a Catastrophe (New York:
Free Press, 2009), 39.

12. Kevin P. Phillips, Arrogant Capital: Washington, Wall Street, and the Frustra-
tion of American Politics (New York: Little, Brown, and Co., 1995), 97.

13. Tett, Fool's Gold, 40.

14. Hacker and Pierson, Winner-Take-All Politics, 197.

15. Financial Services Modernization (Gramm-Leach-Bliley) Act of 1999, Pub. L. 106-
102, 113 Stat. 1338 (codified in scattered sections of 12 and 15 U.S.C.).

16. Partnoy, Infectious Greed, 141.

17. Tett, Fool's Gold, 40.

18. See SEC Rule 3a-7 [17 CFR 270.3a-7], adopted in 57 Fed. Reg. 56,256 (Nov. 27,
1992). For discussion of the Dodd-Frank Reform Bill, see "Elizabeth Warren, TARP
Watchdog and New Deal 2.0 Contributor," in Lynn Parramore, "Disappointing and
Inspiring: Roosevelt Fellows and Colleagues React to FinReg," Huffington Post
(June 25, 2010), available at link #77; Marshall Auerback, "A Proposal for Genuine
Financial Reform," New Am. Found. (Feb. 2010), available at link #78.

19- Roger Lowenstein, The End of Wall Street (New York: Penguin Press, 2010), 58.

20. Ibid., 58-59.

21. Ibid., 59.

22. The President's Working Group on Financial Markets, Over-the-Counter Deriva-
tives Markets and the Commodity Exchange Act (1999), 1, available at link #79.

23. Tett, Fool's Gold, 75.

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Notes

337

24. Financial Crisis Inquiry Commission, Financial Crisis Inquiry Report (2011), xxiv,
available at link #76.

25. And according to Louise Story of the New York Times, the secrecy serves an
important (anti)competitive purpose as well. See Louise Story, "A Secretive Bank-
ing Elite Rules Trading in Derivatives," New York Times, Dec. 11, 2010, available
at link #80.

26. Financial Crisis Inquiry Commission has likewise pointed to lack of "price trans-
parency" as a factor that exacerbated the crisis. See Financial Crisis Inquiry Com-
mission, Financial Crisis Inquiry Report (2011), 267.

27. Partnoy, Infectious Greed, 46.

28. Financial Crisis Inquiry Commission, Financial Crisis Inquiry Report (2011), 40.
29- Partnoy, Infectious Greed, 46.

30. Ibid., 402.

31. Financial Crisis Inquiry Commission, Financial Crisis Inquiry Report (2011), 53-

32. Posner, The Crisis of Capitalist Democracy, 192-93-

33. Ibid., 251 (emphasis added).

34. Ibid., 168.

35. Ibid., 264 (emphasis added).

36. Financial Crisis Inquiry Commission, Financial Crisis Inquiry Report (2011), 211
(quoting Moody's COO Andrew Kimball).

37. Ibid., xvii.

38. Raghuram G. Rajan, Fault Lines: Hoiv Hidden Fractures Still Threaten the World
Economy (Princeton, N.J.: Princeton University Press, 2010), 152.

39. Marcus Miller, Paul Weller, and Lei Zhang, "Moral Hazard and the U.S. Stock
Market: Analyzing the Greenspan Put,' " CSGR Working Paper no. 83/01 (2001),
available at link #81. Financial Crisis Inquiry Commission reached a similar con-
clusion. See Financial Crisis Inquiry Commission, Financial Crisis Inquiry Report
(2011), 60-61. See also Rajan, Fault Lines, 112-14.

40. Rajan, Fault Lines, 148.

41. Simon Johnson and James Kwak, 13 Bankers (New York: Pantheon Books, 2010),
151-52. The change was in the Federal Deposit Insurance Corporation Improve-
ment Act of 1991.

42. Ibid., 180. In a later analysis, Kwak writes "that the ['too big to fail'] subsidy
exists, even after controlling for other factors that explain bank funding costs,
and that it is in the range of 50 to 73 basis points." James Kwak, "Who Is Too
Big to Fail? " Presented at "New Ideas for Limiting Bank Size," conference of the
Fordham Corporate Law Center, Fordham Law School, New York, March 12,
2010, 26.

43. Financial Crisis Inquiry Commission, Financial Crisis Inquiry Report (2011), 58.

44. Rajan, Fault Lines, 122.

45. Ibid., 143, citing Michiyo Nakamoto and David Wighton, "Citigroup Chief Stays
Bullish on Buyouts," Financial Times, July 9, 2007.

46. Ibid., 148.

47. Paul Krugman,"Zombie Financial Ideas," New York Times, Opinion Blogs: The
Conscience of a Liberal, Mar. 3, 2009, available at link #82.

48. As my colleague Mark Roe has argued, another example of too much regula-
tion may have been the decision by Congress of when to give derivatives high

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338 Notes

priority in bankruptcy, which forced the government to intervene to avoid the
catastrophic costs of derivatives being the primary debt paid by defaulting banks.
See Mark J. Roe, "The Derivatives Market's Payment Priorities as Financial Crisis
Accelerator," ECGI Law Working Paper No. 153/2010 (Jan. 2011); Harvard Public
Law Working Paper No. 10-17, available at link #83.
49- Johnson and Kwak, 13 Bankers, 58.

50. Hacker and Pierson, Winner-Take-All Politics, 185.

51. John Kenneth Galbraith, The Economics of Innocent Fraud: Truth for Our Time
(New York: Houghton Mifflin Harcourt, 2004), x.

52. Johnson and Kwak, 13 Bankers, 9-10.

53. Rajan, Fault Lines, 181.

54. Financial Crisis Inquiry Commission, Financial Crisis Inquiry Report (2011), xviii.

55. Hacker and Pierson, Winner-Take-All Politics, 226.

56. Ibid., 226-27.

57. Ibid., 227.

58. Partnoy, Infectious Greed, 146.

59. Ibid., 145-46.

60. Tett, Fool's Gold, 244.

61. Ibid., 213.

62. Sewell Chan, "Financial Crisis Was Avoidable, Inquiry Finds," New York Times,
Jan. 25, 2011, 3.

63. Rajan, Fault Lines, 154.

Chapter 8. What the "Tells" Tell Us
1. Survey, Global Strategy Group (Jan. 11, 2011), on file with author.

Chapter 9- Why So Damn Much Money

1. Robert Kaiser, So Damn Much Money (New York: Knopf Books, 2009), 356.

2. Norman J. Ornstein, Thomas E. Mann, and Michael J. Malbin, Vital Statistics on
Congress 2008 (Washington, D.C.: Brookings Institution Press, 2008), 19.

3. Arianna Huffington, Third World America (New York: Crown Publishers,
2010), 130.

4. Kaiser, So Damn Much Money, 115.

5. R. Sam Garrett, "The State of Campaign Finance Policy: Recent Developments
and Issues for Congress," Cong. Res. Serv. (April 29, 2011), available at link
#84. ("House and Senate campaigns' fund-raising and spending have generally
increased steadily since the early 1990s. Specifically, receipts more than doubled,
from $654.1 million in 1992 to approximately $1.8 billion in 2010. Disbursements
rose similarly, from $675.1 million to approximately $1.8 billion. ") In my view,
the relevant question is much more pragmatic: Does the demand force members
to spend more time raising money than before? Whether spending is constant
relative to income or not, its nominal amount has increased, forcing more time to
be spent on fund-raising. See Stephen Ansolabehere, John M. de Figueiredo, and
James M. Snyder, "Why Is There So Little Money in U.S. Politics? "Journal of Eco-
nomic Perspectives 17(2003): 105.

6. Randall Bennett Woods, LBJ: Architect of American Ambition (New York: Simon
and Schuster, 2006), 434.

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Notes

339

7. History buffs are always fascinated by the strange coincidences between Lincoln
and Kennedy (described and dismantled at Barbara Mikkelson and David P. Mik-
kelson, "Linkin' Kennedy," Snopes.com (Sept. 28, 2007), available at link #85. The
more interesting historical intertwining, in my view, is between the two presi-
dents Johnson. Andrew Johnson, a southern Democrat, was the most important
force blocking the Radical Republicans from achieving their objectives for Recon-
struction. Lyndon Johnson, a southern Democrat, is, in my view, the most impor-
tant political force correcting that deep injustice.

8. House: Federal Election Commission, Financial Activity of All U.S. House of Rep-
resentatives Candidates: 1988-2000, available at link #86; Senate: Federal Elec-
tion Commission, Financial Activity of All U.S. Senate Candidates: 1988-2000,
available at link #87; Political Party Committees: Campaign Finance Institute,
Hard and Soft Money Raised by National Party Committees: 1992-2010, available
at link #88.

9. Kaiser, So Damn Much Money, 272.

10. Thomas Stratmann, "Some Talk: Money in Politics: A (Partial) Review of the Lit-
erature," Public Choice 124 (2005): 135, 148.

11. See John C. Coates, IV, " Fair Value' as an Avoidable Rule of Corporate Law: Minor-
ity Discounts in Conflict Transactions," University of Pennsylvania Law Revieiv
147 (1999): 1251, 1273-77 (reviewing idea of a "control premium").

12. Kaiser, So Damn Much Money, 201.

13- See Gary C. Jacobson, "Modern Campaigns and Representation," in Paul J. Quirk
and Sarah A. Binder, eds., The Legislative Branch (Oxford University Press,
2005), 118.

14. Federal Election Campaign Act of 1971, as amended in 1974, 2 U.S.C. § 431 (1974).

15. James J. Sample, "Democracy at the Corner of First and Fourteenth: Judicial Cam-
paign Spending and Equality " (Aug. 20, 2010), 10 (forthcoming in NYU Annual
Survey of American LaiV); Hofstra Univ. Legal Studies Research Paper No. 10-29,
available at link #89.

16. Samuel Issacharoff, "On Political Corruption," Harvard Laiv Review 124 (2010):
119-20.

17. Sample, "Democracy at the Corner of First and Fourteenth," 10; Hofstra University
Legal Studies Research Paper No. 10-29, available at link #89-

18. Huffington, Third World America, 127.

19- Dan Clawson, Alan Neustadtl, and Mark Weller, Dollars and Votes: How Business
Campaign Contributions Subvert Democracy (Philadelphia, Pa.: Temple Univer-
sity Press, 1998), 91.

20. Hacker and Pierson, Winner-Take-All Politics, 224.

21. Ibid., 160.

22. Bertram Johnson, "Individual Contributions: A Fundraising Advantage for the
Ideologically Extreme? " American Politics Research 38 (2010): 890, 906.

23- Shigeo Hirano, James M. Snyder, Jr., Stephen Ansolabehere, and John Mark Han-
sen, "Primary Competition and Partisan Polarization in the U.S. Senate," National
Science Foundation 2008, 4, finds that primaries don't contribute to polarization
in the Senate, but this is not inconsistent with the claim about gerrymandered
safe seats in the House. Unlike the House, the boundaries of the Senate are set by
state lines.

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340

Notes

24. Morris P. Fiorina and Samuel J. Abrams, Disconnect: The Breakdown of Repre-
sentation in American Politics (Norman, Okla.: University of Oklahoma Press,
2009), 47.

25. Hacker and Pierson, Winner-Take-All Politics, 159-

26. Ibid.

27. Fiorina and Abrams, Disconnect, 87.

28. Jeffrey H. Birnbaum, The Money Men: The Real Story of Fund-raising's Influence
on Political Power in America (New York: Crown Publishers, 2000), 11.

29- Fiorina and Abrams, Disconnect, 168.

30. "Top Industries: Senator Max Baucus 2003-2008," Center for Responsive Politics,
OpenSecrets.org, available at link #90.

31. Hacker and Pierson, Winner-Take-All Politics, 238.

32. Kaiser, So Damn Much Money, 151.

33. Martin Schram, "Speaking Freely," Center for Responsive Politics (1995), 151.

34. Kaiser, So Damn Much Money, 19-

35. Richard W. Painter, Getting the Government America Deserves (Oxford Univer-
sity Press, 2009), 181.

36. This theory has received new support from Google's Ngram Viewer. See link #91.

37. William N. Eskridge, Jr., "Federal Lobbying Regulation: History through 1954," in
The Lobbying Manual, ed. William J. Luneburg et al., 4th ed. (2009), 7 n.7.

38. Trist v. Child, 88 U.S. 451 (1874).

39- Ken Silverstein, Turkmeniscam: How Washington Lobbyists Fought to Flack for
a Stalinist Dictatorship (New York: Random House, 2008), 56.

40. Ibid., 57.

41. Ibid., 57-58.

42 . Kenneth G. Crawford, The Pressure Boys: The Inside Story of Lobbying in Amer-
ica (Julian Messner, Inc., 1939), 3-

43- Thompson, Ethics in Congress, 2.

44. Crawford, The Pressure Boys, 25-26.

45. Thompson, Ethics in Congress, 2.

46. Painter, Getting the Government America Deserves, 27.

47. Crawford, The Pressure Boys, 27. Crawford states this letter is from "Edwards,"
but there was no "G. W. Edwards" who served in Congress. George Washington
Edmonds served from 1913 to 1934. See Edmonds, George Washington, (1864-
1939), in Biographical Directory of the United States Congress, available at
link #92.

48. This idea is framed in Richard L. Hall and Alan V. Deardorff, "Lobbying as Legisla-
tive Subsidy," American Political Science Revieiv 100, no. 1 (Feb. 2006): 69, and
described later.

49. Kaiser, So Damn Much Money, 291.

50. Silverstein, Turkmeniscam, 55.

51. Kaiser, So Damn Much Money, 291.

52. Rob Porter and Sam Walsh, "Earmarks in the Federal Budget Process," Harvard
Law Sch. Fed. Budget Policy Seminar, Briefing Paper No. 16 (May 1), 18, available
at link #93.

53. Thompson, Ethics in Congress, 3- See also Fiorina and Abrams, Disconnect, 90
("politics today is much 'cleaner' ").

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Notes

341

54. Justin Fox and Lawrence Rothenberg, "Influence Without Bribes: A Non-
Contracting Model of Campaign Giving and Policymaking," Working Paper 10/4/10.

There are others who have developed models that might explain influence
without assuming quid pro quo bribes. See, e.g., Brendan Daley and Erik Snow-
berg, "Even If It's Not Bribery: The Case for Campaign Finance Reform," unpub-
lished working paper (Feb. 12, 2009), 1, available at link #94 ("We develop a
dynamic multi-dimensional signaling model of campaign finance in which can-
didates can signal their ability by enacting policy and/or by raising and spending
campaign funds, both of which are costly. Our model departs from the existing
literature in that candidates do not exchange policy influence for campaign con-
tributions, rather, they must decide how to allocate their efforts between policy-
making and fund-raising. If high-ability candidates are better policymakers and
better fund-raisers then they will raise and spend campaign funds even if voters
care only about legislation. Voters' inability to reward or punish politicians based
on past policy allows fund-raising to be used to signal ability at the expense of
voter welfare. Campaign finance reform alleviates this phenomenon and improves
voter welfare at the expense of politicians. Thus, we expect successful politicians
to oppose true campaign finance reform. We also show our model is consistent
with findings in the empirical and theoretical campaign finance literature");
Filipe R. Campante, "Redistribution in a Model of Voting and Campaign Contri-
butions," unpublished working paper (Aug. 2010), available at link #95 ("even
though each contribution has a negligible impact, the interaction between con-
tributions and voting leads to an endogenous wealth bias in the political process,
as the advantage of wealthier individuals in providing contributions encourages
parties to move their platforms closer to those individuals' preferred positions").

55. I am not aware of any other work drawing upon Hyde, to model the lobbying
behavior of Congress, but Phebe Lowell Bowditch does use it to understand the
patronage system in Ancient Rome. See Horace and the Gift Economy of Patron-
age (Berkeley: University of California Press, 2001).

56. Lewis Hyde, The Gift: Creativity and the Artist in the Modern World (1979), 3.

57. Lawrence Lessig, Remix: Making Art and Commerce Thrive in the Hybrid Econ-
omy (New York: Penguin, 2008), 117-76.

58. Hyde, The Gift, 56.

59- Dan Clawson and his colleagues put the point similarly,

Campaign contributions are best understood as gifts, not bribes. They are
given to establish a personal connection, open an avenue for access, and cre-
ate a generalized sense of obligation. Only rarely — when the normal system
breaks down — does a contributor expect an immediate reciprocal action by
a politician. Even then, the donor would normally use circuitous language to
communicate this expectation.

Clawson, Neustadtl, and Weller, Dollars and Votes, 61-62.

The sociologist Clayton Peoples has picked up on their analysis:

A true relationship can build between contributors and legislators, and this
starts with the initial contribution. Clawson et al. (1998) note that PAC officers

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342

Notes

tend to deliver contributions in person so that they can start building a rela-
tionship (p. 33). The relationships begun with initial contributing grow stron-
ger with subsequent interactions. Part of this stems from the overlapping
activities of PAC associates and legislators, or the "focused organization" of
their ties to use Feld's (1981) terminology. PAC personnel "inhabit the same
social world as [lawmakers] and their staffs . . ." and therefore contact occurs
frequently since they "live in the same neighborhoods, belong to the same
clubs, share friends and contacts, [etc.]" (Clawson et al. 1998: 85-86). This
leads to genuine social relationships described by some as "friendship" and
characterized by mutual trust. One PAC officer Clawson et al. (1998) inter-
viewed said, "It's hard to quantify what is social and what is business Some

of those [legislators] are my best friends on the Hill. I see them personally,
socially. . .they always help me with issues" (pp. 86-87). Other PAC officers
provide similar statements. For instance, one officer contends, "The [legis-
lator] that is your friend, you are going to be his primary concern. The PAC
certainly is an important part of that. . ." (p. 85). This leads Clawson et al. to
conclude, "What matters is ... a relationship of trust: a reputation for taking
care of your friends, for being someone whom others can count on, and know-
ing that if you scratch my back, I'll scratch yours" (p. 88).

Clayton D. Peoples, "Contributor Influence in Congress: Social Ties and PAC
Effects on U.S. House Policymaking," Sociology Quarterly 51 (2010): 649, 653-54.

Tolchin and Tolchin made a similar point in their powerful book Pinstripe
Patronage: Political Favoritism from the Clubhouse to the White House and
Beyond: "Lobbyists and members of Congress often become tied to each other
through relationships based on mutual favors. These ties have become much
stronger in recent years as election "reform" necessitates more and more fund-
raising interdependence." Martin Tolchin and Susan J. Tolchin, Pinstripe Patron-
age: Political Favoritism from the Clubhouse to the White House and Beyond
(Boulder, Colo. Paradigm Publishers, 2010), 89.

60. Thomas M. Susman, "Private Ethics, Public Conduct: An Essay on Ethical Lobby-
ing, Campaign Contributions, Reciprocity, and the Public Good," Stanford Law
and Policy Review 19 (2008): 10, 15 (quoting Paul H. Douglas, Ethics in Govern-
ment [1952], 44).

61. Tolchin and Tolchin, Pinstripe Patronage, 2.

62. Kaiser, So Damn Much Money, 297.

63. Ibid.

64. Susman, "Private Ethics, Public Conduct," 10, 15-17.

65. Michele Dell'Era, Lobbying and Reciprocity, working paper, Nov. 2009, 19.

66. Lawrence Lessig, "Democracy After Citizens United," Boston Review (Sept. /Nov.
2010), 15.

67. Kaiser, So Damn Much Money, 72.

68. Painter, Getting the Government America Deserves, 155. ( "Campaign contribu-
tions are involved in earmarks, sometimes from lobbyists and sometimes from
other persons and entities that benefit from earmarks.")

69- Kaiser, So Damn Much Money, 124.

70. Silverstein, Turkmeniscam, 137.

71. Birnbaum, The Money Men, 169-70.

RepublicLost_HCtextFl.indd 342

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Notes 343

72. Ibid., 50.

73. Ibid., 169.

74. Kaiser, So Damn Much Money, 193-94.

75. Ibid., 172.

76. Ibid., 167.

77. Association of American Medical Colleges, "The Scientific Basis of Influence and
Reciprocity: A Symposium" (2007), 10-12, available at link #96.

78. This idea is developed in Bruce Ackerman and Ian Ayres, Voting with Dollars:
A New Paradigm for Campaign Finance (New Haven: Yale University Press,
2002), 25-44.

79- Martin Schram, "Speaking Freely," 94.

80. Kaiser, So Damn Much Money, 353-

81. See Bard Harstad and Jakob Svensson, "Bribes, Lobbying and Development,"
American Political Science Review 46 (2011): 105.

82. Raquel M. Alexander, Stephen W. Mazza, and Susan Scholz, "Measuring Rates of
Return on Lobbying Expenditures: An Empirical Case Study of Tax Breaks for Mul-
tinational Corporations,"/o«m«/ of Law and Policy 25 (2009): 401, 404.

83. Brian Kelleher Richter, Krislert Samphantharak, and Jeffrey F. Timmons, "Lobby-
ing and Taxes," American Journal of Political Science 53 (2009): 893, 907.

84. John M. de Figueiredo and Brian S. Silverman, "Academic Earmarks and the
Returns to Lobbying," Journal of Law and Economics 49 (2006): 597, 598.

85. Frank Yu and Xiaoyun Yu, "Corporate Lobbying and Fraud Detection," Jour-
nal of Finance and Quantitative Analysis 46 (forthcoming 2011), available at
link #97.

86. Matthew D. Hill, G. W. Kelly, G. Brandon Lockhart, and Robert A. Van Ness, "Deter-
minants and Effects of Corporate Lobbying," unpublished working paper (Sept. 3,
2010), 3-4, available at link #98.

87. Silverstein, Turkmeniscam, 74.

88. Hacker and Pierson, Winner-Take-All Politics, 118.
89- Huffmgton, Third World America, 129-

90. Radley Balko, "Washington's Wealth Boom," FOXNews.com (Jan. 12, 2009), avail-
able at link #99.

91. Robert Reich, "Everyday Corruption," lecture given at the Edmond J. Safra Center
for Ethics, April 5, 2010 (on file with author).

92. Kaiser, So Damn Much Money, 20.

93- American Bar Association, "Lobbying Law in the Spotlight: Challenges and Pro-
posed Improvements," Task Force on Federal Lobbying Laws Section of Adminis-
trative Law and Regulatory Practice (J an - 3, 2011), vi, available at link #100.

94. Ibid., 20 (emphasis added). The ABA acknowledged that it drew on Susman, "Pri-
vate Ethics, Public Conduct," 10.

95. Painter, Getting the Government America Deserves, 202.

96. Clawson, Neustadtl, and Weller, Dollars and Votes, 64.

97. Brooks, Corruption in American Politics and Life, 228.

98. Daniel Hays Lowenstein, "On Campaign Finance Reform: The Root of All Evil Is
Deeply Rooted," Hofstra Law Review 18 (1989): 325.

99. Joseph Mornin, "Lobbyist Money: Analyzing Lobbyist Political Contributions and
Disclosure Regimes" (J une 25, 2011), available at link #101.

RepublicLost_HCtextFl.indd 343

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344 Notes

100. The FEC has likewise radically narrowed the range of contributions that must be
reported, by requiring a specific record indicating a bundle was intended. See
Kevin Bogardus, "Bundling Rule Doesn't Capture All the Fund-raising by Lobby-
ists," The Hill (2009), available at link #102.

101. Richard A. Posner, "Orwell Versus Huxley: Economics, Technology, Privacy, and
Satire," in Philosophy and Literature 24 (2000): 1, 3-

102. Clawson, Neustadtl, and Weller, Dollars and Votes, 84.

103- List of Current Members of the United States House of Representatives by Senior-
ity, available at link #103-

104. Jeffrey Birnbaum, "Hill a Stepping Stone to K Street for Some," Washington Post,
July 27, 2005, available at link #104.

105. Justin Elliot and Zachary Roth, "Shadow Congress: More Than 170 Former Law-
makers Ply the Corridors of Power as Lobbyists," TPMMuckraker Qune 1, 2010),
available at link #105.

106. See Public Citizen, "Ca$hing In: More Than 900 Ex-Government Officials,
Including 70 Former Members of Congress, Have Lobbied for the Financial Ser-
vices Sector in 2009" (2009), available at link #106.

107. Birnbaum, The Money Men, 190-91.

108. Silverstein, Turkmeniscam, 68.

Chapter 10. What So Damn Much Money Does

1. Tom Coburn, "Just Say No to Earmarks," Wall Street Journal, Feb. 10, 2006.

2. Brad Smith on The Sound of Ideas, WCPN (March 29, 2011), 8:20, available at
link #107.

3. The Federalist No. 10 (James Madison), ed. Henry Cabot Lodge (New York: G. P.
Putnam's Sons, 1888), 57 ( "A republic, by which I mean a government in which
the scheme of representation takes place"); The Federalist No. 14 (James Madi-
son), 77 ("The true distinction between these forms was also adverted to on a
former occasion. It is, that in a democracy, the people meet and exercise the gov-
ernment in person; in a republic, they assemble and administer it by their rep-
resentatives and agents"); The Federalist No. 39 (James Madison), 233-34 ("[W]e
may define a republic to be, or at least may bestow that name on, a government
which derives all its powers directly or indirectly from the great body of the
people, and is administered by persons holding their offices during pleasure, for
a limited period, or during good behavior. It is essential to such a government
that it be derived from the great body of the society, not from an inconsiderable
proportion, or a favored class of it; otherwise a handful of tyrannical nobles,
exercising their oppressions by a delegation of their powers, might aspire to the
rank of republicans, and claim for their government the honorable title of repub-
lic. It is sufficient for such a government that the persons administering it be
appointed, either directly or indirectly, by the people; and that they hold their
appointments by either of the tenures just specified") (emphasis in the original).

4. Zephyr Teachout, "The Anti-Corruption Principle," Cornell Law Review (2008),
341, 377. Here and throughout I have drawn heavily upon Professor Teachout's
original framing of this issue. Her work made clearer the sense in which the
current Congress was a "corruption" of the framing design. Teachout has

RepublicLost_HCtextFl.indd 344

8/23/11 1:19:52 AM

Notes 345

extended her analysis in a forthcoming book, Benjamin Franklin's Snuff Box
(forthcoming, 2012).

5. See, e.g., Gordon S. Wood, Empire of Liberty: A History of the Early Republic,
1789-1815 (Oxford University Press, 2009), 429 ("For some American leaders,
however, the ink on the Declaration of Independence was scarcely dry before
they began expressing doubts about the possibility of realizing the high hopes
and dreams of the Revolution); Kurt T. Lash, "Rejecting Conventional Wisdom:
Federalist Ambivalence in the Framing and Implementation of Article V," Ameri-
can Journal of Legal History 38 (1994): 197, 225 ("In the decade following the
Revolution, the track record of the state legislatures provided less reason to see
society in terms of majorities acting for the common good and more reason to
see competing factional interests that had to be controlled through institutional
safeguards").

6. See Dennis Thompson, "Two Concepts of Corruption," George Washington Law
Review 73 (2005): 1036, 1038. ("The democratic process is the modern surro-
gate for the consensus on the public good that traditional theorists hoped citi-
zens could recognize ")

7. The Federalist No. 52 (James Madison), 328. See Glenn Fung, "The Disputed
Federalist Papers: SVM Feature Selection via Concave Minimization," Proc. 2003
Conf. on Diversity in Computing, 42-46, available at link #108 (presenting the
results of a quantitative word analysis suggesting that Madison wrote Federalist
52 and noting that " [t] his result coincides with previous work on this problem
using other classification techniques").

8. That the very notion of corruption requires an appropriate baseline from which
to measure is familiar. See, e.g., Thomas F. Burke, "The Concept of Corruption in
Campaign Finance Law," Constitutional Commentary 14 (1997): 127, 128 ("Cor-
ruption is thus a loaded term: you cannot call something corrupt without an

implicit reference to some ideal [Ojne must have some underlying notion of

the pure, original or natural state of the body politic").

9. Teachout, "The Anti-Corruption Principle," 341, 359-60.

10. See New Jersey Constitution of 1776, article XX, cited in John Joseph Wallis,
"The Concept of Systematic Corruption in American History," in Glaeser and
Goldin, eds., Corruption and Reform, 34, available at link #109.

11. Adrian Vermeule, "The Constitutional Law of Official Compensation," Columbia
Law Review 102 (2002): 501, 509-10.

12. Teachout, "The Anti-Corruption Principle," 341, 362-63.

13- Notes of James Madison (Aug. 13, 1787), in vol. 2 of Records of the Federal Con-
vention, 267, 279.

14. By setting the baseline to "dependence upon the people alone," I don't mean to
be fixing upon any particular theory of what that representation should be. In
particular, my formulation is meant to be agnostic between a "sanction model" of
representation and a "selection model." See Jane Mansbridge, "A Selection Model'
of Political Representation," Journal of Political Philosophy 17 (2009): 369.
With both models, there is at least a moment when a representative is account-
able. That moment establishes the dependency, however that dependency is
expressed.

RepublicLost_HCtextFl.indd 345

8/23/11 1:19:52 AM

346 Notes

15. See John Armor, "Congress for Life," Inner Self, available at link #110 (last visited
June 21, 2011).

16. Robert L. Trivers, "The Evolution of Reciprocal Altruism," Quarterly Revieiv of
Biology 46 (1971): 35.

17. Brooks, Corruption in American Politics and Life, 274.

18. Melvin Urofsky, Louis D. Brandeis: A Life (New York: Pantheon, 2009), 159.

19- Survey, Global Strategy Group (J an - H. 2011), on file with author. See also Hart
Research Associates, "Protecting Democracy from Unlimited Corporate Spend-
ing: Results from a National Survey among 1,000 Voters on the Citizens United
Decision" (2010) (finding that 95 percent strongly agree or somewhat agree that
"[corporations spend money on politics to buy influence/elect people favor-
able to their financial interests"), 7. See also Eric Zimmermann, "Poll: 70 Per-
cent Believe Congress Is Corrupt," The Hill's blog Briefing Room (Aug. 10, 2010),
available at link #111 (reporting the results of a Rasmussen poll that " [v]oters are
more likely to trust the integrity of their own representative, but not by much. A
majority, 56 percent, think their own lawmakers can be bought"). See also "Poll:
Half of Americans Think Congress Is Corrupt," CNN (Oct. 19, 2006), available
at link #112 (finding that, four years before the Rasmussen poll, 49 percent of
Americans said "most members of Congress are corrupt" and 22 percent said
their individual legislator was corrupt); "Distrust, Discontent, Anger and Parti-
san Rancor: The People and Their Government," Pew Research Center (2010),
51, available at link #113.

20. Schram, "Speaking Freely," 89.

21. Ibid., 31.

22. Ibid., 16.

23. Ibid., 23.

24. Larry Makinson, "Speaking Freely," Center for Responsive Politics (2003).

25. Bill Bradley, "Government and Public Behavior," Public Talk: Online Journal of
Discourse Leadership, available at link #114.

26. Makinson, "Speaking Freely," 44.

27. Ibid.

28. For a review, see Frank R. Baumgartner and Beth L. Leech, Basic Interests
(Princeton, N.J.: Princeton University Press, 1998). F. R. Baumgartner, Jeffrey M.
Berry, Marie Hojnacki, David C. Kimball, and Beth L. Leech, Lobbying and Policy
Change: Who Wins, Who Loses, And Why (Chicago: University of Chicago Press,
2009), 320. See also Lowenstein, "On Campaign Finance Reform," 307-8 (sum-
marizing skeptics' view).

29. Baumgartner, Berry, Hojnacki, Kimball, and Leech, Lobbying and Policy
Change, 194.

30. Stephen Ansolabehere, John M. de Figueiredo, and James M. Snyder, "Why Is
There So Little Money in U.S. Politics?" 105.

31. Ibid., 114; Stephen Ansolabehere, John M. de Figueiredo, and James M. Snyder,
"Why is There So Little Money in U.S. Politics?" (Center for Competitive Politics,
June 2002), 114, available at link #115.

32. Ansolabehere, Figueiredo, and Snyder, "Why Is There So Little Money in U.S. Poli-
tics?" (2003), 105.

RepublicLost_HCtextFl.indd 346

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Notes

347

33- Ansolabehere, Figueiredo, and Snyder, "Why Is There So Little Money in U.S. Poli-
tics?" (2002), 20.

36. Center for Competitive Politics, "Fairly Flawed: Analysis of the 2009 Fair Elections
Now Act (H.R. 1826 and S. 752)," Policy Briefing 2 (2009): 4.

37. As Richter and his colleagues write, " [T]he inordinate attention given to PAC con-
tributions is essentially an exercise in looking under the lamppost' since PAC
data have been readily available since the 1970s, whereas lobbying data have only
become available recently. . .While focusing on contentious bills has its merits,
crafty politicians have a variety of tools at their disposal to deliver favors, includ-
ing attaching riders to mundane bills and exercising their power to steer bills in
the congressional committee process. By not considering outcomes more broadly
defined than roll-call votes on specific bills, existing research has arguably failed
to detect some important benefits firms receive." Brian Kelleher Richter, Krislert
Samphantharak, and Jeffrey F. Timmons, "Lobbying and Taxes," American Jour-
nal of Political Science 53 (2009): 894 (citations omitted).

38. Stratmann, "Some Talk: Money in Politics," 135, 146.

39- Sanford C. Gordon, Catherine Hafer, and Dimitri Landa, "Consumption or
Investment? On Motivations for Political Giving," Journal of Politics 69 (2007):

40. Sanjay Gupta and Charles W. Swenson, "Rent Seeking by Agents of the Firm," Jour-
nal of Law and Economics 46 (2003): 253.

41. Atif Mian, Amir Sufi, and Francesco Trebbi, "The Political Economy of the U.S.
Mortgage Default Crisis" (GSB Res. Pap 08-17 2009), 4, available at link #116.

42. As Lowenstein summarizes the skepticism, "When one takes into account all the
defects and difficulties inherent in these studies, it becomes increasingly difficult
to regard their mixed results as a clean bill of health for the campaign finance
system." Lowenstein, "On Campaign Finance Reform," 322.

43- "As one Republican senator said: [Fundraising] devours one's time — you spend
two or three years before your re-election fund-raising. The other years, you're
helping others.' " Peter Lindstrom, "Congressional Operations: Congress Speaks —
A Survey of the 100th Congress," Center for Responsive Politics (1988), 80 (quot-
ing unnamed Republican congressman).

"As I spoke to political consultants, they all said I should not even consider
running for the Senate if I weren't prepared to spend 80 or 90 percent of my
time raising money. It turned out that they were absolutely correct" (Rep. Mike
Barnes [D-Md.; 1979-1987]). Philip M. Stern, Still the Best Congress Money Can
Buy (Washington, D.C.: Regnery Publishing, updated and rev. ed., 1992), 130.

"The high costs of running for office at the congressional and statewide level
has [sic] forced 55 percent of statewide and more than 43 percent of U.S. House
candidates to devote at least one-quarter of their time to fund-raising." Paul S.
Hernson and Ronald A. Faucheux, "Candidates Devote Substantial Time and Effort
to Fundraising" (2000), available at link #117.

Senator Robert Byrd, former majority leader, similarly observed: "To raise the
money, Senators start hosting fundraisers years before they next will be in an

34. Ibid.

35. Ibid.

1057.

RepublicLost_HCtextFl.indd 347

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348 Notes

election. They all too often become fundraisers first, and legislators second." 133
Cong. Rec. 115 (daily ed. Jan. 6, 1987).

Former Senate majority leader George Mitchell explained that senators con-
stantly wanted him to reschedule votes because "they [were] either holding or
attending a fund-raising event that evening." Schram, "Speaking Freely," 37-38.

Representative Jim Bacchus explained that he chose not to run for reelec-
tion because he would have had to abandon the job he had "been elected to do
in order to raise a million dollars and be a virtual full-time candidate." Schram,
"Speaking Freely," 43.

44. Makinson, "Speaking Freely," 86.

45. Carrie Budoff Brown, "Senate Bill Weighs in at 2,074 Pages," Politico (Nov. 18,
2009), available at link #118.

46. Ernest Hollings, "Stop the Money Chase," Washington Post, Feb. 19, 2006, avail-
able at link #119.

47. Andy Plattner, "Nobody Likes the Way Campaigns Are Financed, but Nobody's
Likely to Change It, Either," U.S. News & World Report, June 22, 1987, 30.

48. Anthony Corrado, "Running Backward: The Congressional Money Chase," in Nor-
man J. Ornstein and Thomas E. Mann, eds., The Permanent Campaign and Its
Future (Washington, DC: American Enterprise Institute; Brookings Institution,
2000), 75.

49. Norman J. Ornstein and Thomas E. Mann, "Conclusion," in Ornstein and Mann,
eds., The Permanent Campaign, 221-22.

50. Norman J. Ornstein and Thomas E. Mann, "When Congress Checks Out," Foreign
Affairs (Nov.-Dec. 2006), 67, 70; see also Paul J. Quirk, "Deliberation and Deci-
sion Making," in Paul J. Quirk and Sarah A. Binder, eds. The Legislative Branch
(Oxford University Press, 2005), 314, 336 (effect on oversight panels).

51. Numbers drawn from Norman J. Ornstein, Thomas E. Mann, and Michael J. Mal-
bin, Vital Statistics on Congress 2008 (Washington, D.C.: Brookings Institution
Press, 2008). See also Thomas E. Mann and Norman J. Ornstein, The Broken
Branch (Oxford University Press, 2006), 18 ("In the 1960s and 1970s, the average
Congress had an average of 5,372 House committee and subcommittee meetings;
in the 1980s and 1990s the average was 4,793- In the . . . 108th, the number was
2,135").

52. Numbers drawn from Ornstein, Mann, and Malbin, Vital Statistics on Congress
2008. See also Mann and Ornstein, The Broken Branch, 18.

53. Gordon S. Wood, Empire of Liberty: A History of the Early Republic, 1789-1815
(Oxford University Press, 2009), 1272-73.

54. Steven S. Smith, "Parties and Leadership in the Senate," in Quirk and Binder, eds.,
The Legislative Branch (Oxford University Press, 2005), 274-75.

55. Andrew Seidman, "Former Members of Congress Lament Current Partisanship,"
McClatchy Quae 16, 2010), available at link #120.

56. Makinson, "Speaking Freely," 39-40.

57. Ibid., 6.

58. Lee Hamilton, "Will the House Come to Order?" The American Interest Online
(Sept.-Oct. 2006), available at link #121.

59- To complain about distraction is not to betray doubt, as Daniel Ortiz puts it, about
voters. A voter, like any employer, could well want his agent to stay focused on

RepublicLost_HCtextFl.indd 348

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Notes

349

the job, if only to avoid the necessity of extra monitoring. See Daniel R. Ortiz,
"The Democratic Paradox of Campaign Finance Reform," Stanford Law Review
50 (1997) (arguing support for campaign finance reform is premised upon doubt
about voters). The same applies to Issacharoff and Karlan's claim that a concern
about "corruption" is really a concern about a "corruption of voters." For again, if
the focus is on a distorted process, even if the voters could compensate for that
distortion, they are rational to avoid the distraction that forces them to compen-
sate. The fact that I double check the cash drawer does not mean I have no good
reason to avoid hiring a kleptomaniac. See Samuel Issacharoff and Pamela S. Kar-
lan, "The Hydraulics of Campaign Finance Reform," Texas Law Review 77 (1998):
1723-26.

Relatedly, Issacharoff and Karlan point to the "well-known feature of Ameri-
can political participation: there is a strong positive correlation between an indi-
vidual's income and education level and the likelihood that she will go to the polls
and cast a ballot." Ibid., 1725. In fact the connection to policy outcomes is more
complicated. As I describe below, see text at n. 104: policy tracks income, but the
richest are not the most highly educated.
60. Baumgartner, Berry, Hojnacki, Kimball, Leech, Lobbying and Policy Change,

61. This table is based, with permission, on Figure 12.1 in ibid., 258. 1 have re-created
it using a subset of the data drawn from Table 1.4 in ibid.

62. Ibid., 258.

63. Richard L. Hall and Alan V. Deardorff, "Lobbying as Legislative Subsidy," Ameri-
can Political Science Review 100 (Feb. 2006): 69-

64. Center for Responsive Politics, OpenSecrets.org, Lobbying Database, available at
link #122.

65. Hall and Deardorff, "Lobbying as Legislative Subsidy," 81.

66. Or as Baumgartner et al. report, almost everyone. See Laura I. Langbein, "Money
and Access: Some Empirical Evidence," Journal of Politics 48 (1986): 1052; Kevin
M. Esterling, "Buying Expertise: Campaign Contributions and Attention to Policy
Analysis in Congressional Committees," American Political Science Review 101
(2007): 93; Clawson, Neustadtl, and Weller, Dollars and Votes.

67. Makinson, "Speaking Freely," 59- See also Thompson, Ethics in Congress, 117.

68. Declaration of Paul Simon, McConnell v. FEC, No. 02-0582 (D.D.C. 2002).

69. Clawson, Neustadtl, and Weller, Dollars and Votes, 8.

70. Schram, "Speaking Freely," 62.

71. Hall and Deardorff, "Lobbying as Legislative Subsidy," 80.

72. Ibid., 81.

73. Ibid.

74. Johnson and Kwak, 13 Bankers, 191-92.

75. Hall and Deardorff, "Lobbying as Legislative Subsidy," 69 (emphasis added).

76. U.S. Senate, Roll Call Vote on H.R. 6124, Food, Conservation, and Energy Act of
2008, available at link #123; U.S. House of Representatives, Office of the Clerk,
Final Vote Result for Roll Call 417, available at link #124.

77. "The Cash Committee: How Wall Street Wins on the Hill," Huffington Post (Dec.
29, 2009), available at link #125.

78. Schram, "Speaking Freely," 12.

257-58.

RepublicLost_HCtextFl.indd 349

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350

Notes

79. Ibid., 18.

80. Ibid., 48-49.

81. Ibid., 93.

82. Birnbaum, The Money Men, 171.

83- Clawson, Neustadtl, and Weller, Dollars and Votes, 67.

84. Hall and Deardorff, "Lobbying as Legislative Subsidy," 79.

85. Tolchin and Tolchin, Pinstripe Patronage, 78. This shape-shifting is also related
to an argument by Harvard professor Jane Mansbridge about why contribution
studies are not likely to measure influence. As she describes, interest groups fund-
ing campaigns will fund candidates who already believe in the policies the groups
favor. This produces not "quid pro quo distortion," as Mansbridge describes it, but
"selection distortion," eliminating even the need for shape-shifting as the change
happens as the member is selected. Jane Mansbridge, "Clarifying the Concept of
Representation," unpublished manuscript, May 2011.

86. General Interim Report of the House Select Committee on Lobbying Activities,
H.R. Rep 3138, 81st Congress 2nd Session, 62.

87. Baumgartner, Berry, Hojnacki, Kimball, Leech, Lobbying and Policy Change, 2.

88. Interview with Larry Pressler, June 16, 2011 (on file with author).

89- The foundational work is George Stigler's, "The Theory of Economic Regu-
lation," Bell Journal of Economics and Management Science 2 (1971): 3, and
Richard Posner's, "Taxation by Regulation," Bell Journal of Economics and
Management Science 2 (1971): 22. See also Richard A. Posner, "Theories of
Economic Regulation," Bell Journal of Economics and Management Science
5 (1974): 335; Sam Peltzman, "Toward a More General Theory of Regulation,"
Journal of Law and Economics 19 (1976): 211; Burton Abrams and R. Settle,
"The Economic Theory of Regulation and Public Financing of Presidential Elec-
tions," Journalof Political Economy 86 (1978): 245; James Q. Wilson, The Pol-
itics of Regulation (1980). Steven Croley's is perhaps the best recent effort to
summarize and extend this analysis as it affects agency regulation in particular.
See Regulation and the Public Lnterests: The Possibility of Good Regulatory
Government (2008).

90. Luigi Zingales, Preventing Economists' Capture (2011), 2.

91. See generally Keith T. Poole and Howard Rosenthal, Congress: A Political-
Economic History of Roll Call Voting (Oxford University Press, 1997).

92. Larry M. Bartels, "Economic Inequality and Political Representation," working
paper (2005), available at link #126.

93. Martin Gilens, "Inequality and Democratic Responsiveness," Public Opinion
Quarterly 69 (2005): 778, 781-82. Gilens's argument has been criticized by Stuart
Soroka and Christopher Wlezien; see "On the Limits to Inequality in Representa-
tion," PS: Political Science and Politics 41 (2008): 319-27. But as Gilens writes in
response to Soroka and Wlezien, his results and Bartels's are consistent with those
of a wide range of scholars, who all find "that more privileged subgroups of Amer-
icans have greater — and sometimes dramatically greater — sway over government
policy." Martin Gilens, "Preference Gaps and Inequality in Representation," PS:
Political Science and Politics 42 (2009): 335-41, 335.

94. Gilens, "Inequality and Democratic Responsiveness," 778, 788.

RepublicLost_HCtextFl.indd 350

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Notes 351

95. Ibid.

96. Hacker and Pierson, Winner-Take-All Politics, 3.

97. Ibid.

98. Ibid., 16.

99. Ibid., 24.

100. Ibid., 194.

101. Ibid., 19.

102. Ibid., 21.

103- Rajan and Zingales, Saving Capitalism from the Capitalists, 92.

104. Ibid.

105. Gilens, "Inequality and Democratic Responsiveness," 778, 792.

106. Joseph E. Stiglitz, "Of the 1%, by the 1%, for the 1%," Vanity Fair, May 2011, 2,
available at link #127.

107. Tyler Cowen, "The Inequality That Matters," The American Interest (Jan. -Feb.
2011), 4-5, available at link #128.

108. Huffington, Third World America, 17-18.

109- Sarah Anderson et al., "Executive Excess 2008: How Average Taxpayers Subsi-
dize Runaway Pay," 15th Annual CEO Compensation Survey, Institute for Policy
Studies and United for a Fair Economy (Aug. 25, 2008), 1, available at link #129.

110. Barry Lynn, Cornered: The New Monopoly Capitalism and the Economics of
Destruction (Hoboken, N.J.: Wiley, 2010), 130.

111. Ibid., 130-31.

112. Hacker and Pierson, Winner-Take-All Politics, 151.

113. Gilens, "Inequality and Democratic Responsiveness," 778, 793-94.

114. Kaiser, So Damn Much Money, 355.

115. Kirkpatrick v. Preisler, 394 U.S. 526, 530 (1969).

116. Federal Election Commission: Contribution Limits 2009-10, available at link
#130.

117. Birnbaum, The Money Men, 72.

118. This point is emphasized powerfully in Edward B. Foley, "Equal-Dollars-per-
Voter: A Constitutional Principle of Campaign Finance," Columbia Laiv Review
94 (1994): 1204, 1226-27 ("Voting is only the final stage of the electoral process.
It is preceded not only by the agenda-formation stage . . . but also by . . . the "argu-
mentative stage." . . . [ W] e must acknowledge that a citizen does not have equal
input in the electoral process if she is denied an equal opportunity to participate
in [these earlier stages]"). It is also the insight that animates David Strauss's.
See David A. Strauss, "Corruption, Equality, and Campaign Finance Reform,"
Columbia Law Review 94 (1994): 1373 ("[E]ach dollar contribution. . .is a frac-
tion of an expected vote"). Strauss pushes the analogy (with all of its strengths
and weaknesses) directly to the Court's redistricting cases. In my view, what's
missing from this analysis is the recognition of how equality (and not just cor-
ruption) is derivative from the idea of the proper dependency within a represen-
tative democracy — upon "the People alone."

119. Ansolabehere, de Figueiredo, and Snyder, "Why Is There So Little Money in U.S.
Politics?" (2003), 125-26.

120. Gilens, "Inequality and Democratic Responsiveness," 778, 794.

RepublicLost_HCtextFl.indd 351

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352

Notes

121. Atif Mian, Amir Sun, and Francesco Trebbi, "The Political Economy of the U.S.
Mortgage Default Crisis," National Bureau of Economic Research (2010), 4-6.

122. Nancy L. Rosenblum, On the Side of the Angels (Princeton, N.J.: Princeton Uni-
versity Press, 2008), 251.

123. Ibid., 252.

124. Birnbaum, The Money Men, 70.

125. Hacker and Pierson, Winner-Take-All Politics, 252.

126. Ibid., 252, quoting Naftali Bendavid, The Thumpin': Hoiv Rahm Emanuel and
the Democrats Learned to Be Ruthless and Ended the Republican Revolution
(New York: Doubleday, 2007), 157.

127. Schram, "Speaking Freely," 19-

128. Birnbaum, The Money Men, 3-4.

129- Zach Carter and Ryan Grim, "Swiped: Banks, Merchants and Why Washington
Doesn't Work for You," Huflington Post (April 28, 2011), available at link #131.

131. Baumgartner, Berry, Hojnacki, Kimball, Leech, Lobbying and Policy Change,
257, 214. Baumgartner and his colleagues craft an extensive empirical analysis
of the relationship between lobbying and policy outcomes. The short form of
the conclusion is that a "direct correlation between money and outcomes ... is
simply not there" (214). "While no one doubts that money matters, and while
there is no question that the wealthy enjoy greater access," that doesn't mean,
they argue, that the wealthy "can necessarily write their ticket." But this con-
clusion follows because of the relationship between short-term lobbying and
long-term structures. While "the wealthy" "often do not" "win in Washing-
ton," that's "not because they lack power, but because the status quo already
reflects that power" (194, 20). The status quo "reflects a rough equilibrium of
power . . . and a quite unfair equilibrium . . . with much greater benefits going
to the privileged and wealthy than to the needy and the poor" (23). "So to
see that money cannot automatically purchase shifts in the status quo does
not mean that the status quo might not already reflect important biases in
politics" (214).

132. Lowenstein, "On Campaign Finance Reform," 323. (Addressing skepticism about
the proven effects of money on results, Lowenstein writes: "The question of
campaign finance is a question of conflict of interest ... in the course of a rela-
tionship of trust.")

133- "The People and Their Government: Distrust, Discontent, Anger and Partisan
Rancor," The Pew Research Center (April 18, 2010), 2, available at link #132.

134. Birnbaum, The Money Men, 10.

135. National Election Studies: The ANES Guide to Public Opinion and Electoral
Behavior, University of Michigan Center for Political Studies, available at link

136. New Judicial Watch/Zogby Poll: "81.7% of Americans Say Political Corruption
Played a Major Role' in Financial Crisis," Judicial Watch (Oct. 21, 2008), avail-
able at link #134.

137. Jeanne Cummings, "SCOTUS Ruling Fuels Voters' Ire," Politico (Feb. 9, 2010),
available at link #135. See also University of Texas, "Money and Politics Project
U.S. National Survey" (2009), available at link #136 (finding that 79 percent of

130. Ibid.

#133.

RepublicLost_HCtextFl.indd 352

8/23/11 1:19:52 AM

Notes 353

respondents believe that the source of a candidate's campaign contributions has
a high degree of influence on how a candidate votes on legislation).
138. Huffington, Third World America, 129-

139- As Mark Warren has written, "If low trust instead indicates disaffection from
the institutions that manage distrust, then the kind of distrust necessary for a
democracy to work — engaged monitoring of political officials — is replaced by
disengagement, undermining the transformative capacities of democratic insti-
tutions." Mark E. Warren, "Democracy and Deceit: Regulating Appearances of
Corruption," American Journal of Political Science 50 (2006): 160, 165.

140. Birnbaum, The Money Men, 10.

141. Steven J. Rosenstone and John Mark Hansen, Mobilization, Participation, and
Democracy in America (1993). I am particularly grateful to Bryson Morgan for
helping me frame this distinction.

142. See R. Michael Alvarez, Thad E. Hall, and Morgan Llewellyn, "On American Voter
Confidence," University of Arkansas-Little Rock Law Review 29 (2007): 705;
Robert F. Bauer, "Going Nowhere, Slowly: The Long Struggle Over Campaign
Finance Reform and Some Attempts at Explanation and Alternatives," Catholic
University Law Review 51 (2002): 741, 763 ("Studies conclusively show that
nonvoting does not stem from a rejection of, or hypothesized alienation from,
the political process, but from a lack of interest in it"); David M. Primo and Jef-
frey Milyo, "Campaign Finance Laws and Political Efficacy: Evidence from the
States," Election Law Journal 5 (2006): 1 (relationship between campaign
finance laws and perception of democratic rule), available at link #137; John
Samples, "Three Myths about Voter Turnout in the United States," Cato Institute
(Sept. 14, 2004) ("The asserted line of causality from campaign finance to dis-
trust of government does not exist. Given that, campaign finance cannot cause
declines in voter turnout"), available at link #138.

143. Rosenstone and Hansen, Mobilization, Participation, and Democracy in
America, 144. This conclusion is confirmed by Kevin Chen, Political Alienation
and Voting Turnout in the United States: 1960-1988 (Lewiston, N.Y.: Edwin
Mellen Press, 1992), 214, 217.

144. Thomas E. Patterson, The Vanishing Voter (New York: Knopf, 2002), 183.

145. Rock the Vote, Wikipedia, available at link #139.

146. August 2010 Rock the Vote survey, question #15.

147. "What Do Elected Officials Think About the Role of Money in Politics? " Democ-
racy Matters, available at link #140 (last visited June 21, 2011).

148. Hetherington, Why Trust Matters, 149.
149- Thompson, Ethics in Congress, 125-26.

Chapter 11. How So Damn Much Money Defeats the Left

1. Speech of Barack Obama, Indianapolis, Ind., Oct. 8, 2008.

2. Obama: "'No Welfare for Wall Street': Nominee Is Inclined to Support Con-
gress $700B Bailout Package If It Also Protects Main Street," CBS News Face the
Nation (Sept. 28, 2008), available at link #141.

3. Speech of Barack Obama, San Diego, Calif., May 2, 2007.

4. Speech of Barack Obama, Washington, D.C., April 15, 2008.

5. Speech of Barack Obama, Columbia, S C., Jan. 26, 2008.

RepublicLost_HCtextFl.indd 353

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354 Notes

6. Speech of Barack Obama, Indianapolis, Ind., April 25, 2008.

7. Ibid.

8. Speech of Barack Obama, Philadelphia, Pa., April 2, 2008.

9. Ben Smith, "Hillary Defends Lobbyists, Opens Doors for Rivals," Politico (Aug. 4,
2007), available at link #142.

10. Speech of Barack Obama, Indianapolis, Ind., April 25, 2008.

11. This point is related to Richard Posner's point about the willingness of monopo-
lies to protect their monopoly. See Richard A. Posner, "The Social Costs of Monop-
oly and Regulation," Journal of Politcal Economy 83 (1975): 807.

12. Crawford, The Pressure Boys, 7.

13. Lynn, Cornered, 5-7, 258-59, n. 23.

14. The theory of regulatory capture raises questions about whether cartel-like indus-
tries will use their power to extract rents in the market or through government.
And indeed, as Posner writes, the strongest examples of successful rent seeking
come from relatively competitive industries. See Posner, "Theories of Economic
Regulation," 335, 343-45. The success of the "deregulation" movement may have
now shifted the rent-seeking game toward the focus that now concerns Rajan and
Zingales.

15. Rajan and Zingales, Saving Capitalism from the Capitalists, 296.

16. Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S.
127 (1961); United Mine Workers v. Pennington, 381 U.S. 657 (1965).

17. Obama for America, "Barack Obama and Joe Biden's Plan to Lower Health Care
Costs and Ensure Affordable, Accessible Health Coverage for All" (2008), 5-6,
available at link #143.

18. Emphasis added.

19. "Top Industries: Most Profitable," CNN Money, available at link #144.

20. Pub. L. No. 108-173, 117 Stat. 2066 (2003) (codified as 42 U.S.C.A. § 1395w-101 et
seq.).

21. 2009 Annual Report of the Boards of Trustees of the Federal Hospital Insurance
and Federal Supplementary Medical Insurance Trust Funds, Centers for Medicare
and Medicaid Services (2009), 120, available at link #145.

22. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003
expressly prohibits the Centers for Medicare and Medicaid Services within the
Department of Health and Human Services from (i) interfering with negotia-
tions among drug manufacturers, prescription drug plans, and pharmacies, (ii)
requiring prescription drug plans to use a particular formulary instituting a price
structure for the reimbursement of drugs provided under Part D. Medicare Pre-
scription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-
173, sec. 101(a) (2), § 1395w-lll, 117 Stat. 2066, 2092-99 (2003) (codified as 42
USC 5 1395w-lll[i] [2006]).

23. 153 Cong. Rec. S4634 (daily ed., April 18, 2007) (statement of Sen. Obama).

24. Obama for America, "Barack Obama and Joe Biden's Plan to Lower Health Care
Costs."

25. Jonathan Cohn, "How They Did It," New Republic, June 10, 2010, 14, 15.

26. Ibid., 14, 18.

27. Speech of Barack Obama, Indianapolis, Ind., April 25, 2008.

28. Speech of Barack Obama, Columbia, S.C., Jan. 26, 2008.

RepublicLost_HCtextFl.indd 354

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Notes 355

29. Cohn, "How They Did It," 14, 21.

30. Ibid.

31. Ibid., 14, 25.

32. Speech of Barack Obama, Washington, D.C., April 15, 2008.

33- Ezra Klein, "Twilight of the Interest Groups," Washington Post, Mar. 19, 2010,
available at link #146.

34. Speech of Barack Obama, San Diego, Calif., May 2, 2007.

35. Glenn Greenwald, "Industry Interests Are Not in Their Twilight," Salon (Mar. 20

2010) , available at link #147.

36. Oliver Hart and Luigi Zingales, "Curbing Risk on Wall Street," National Affairs 3
(Spring 2010), 20-21, available at link #148.

37. Johnson and Kwak, 13 Bankers, 180.

38. Hart and Zingales, "Curbing Risk on Wall Street," 20, 21.

39- "Trade Offs — National Priorities Project: Bringing the Federal Budget Home,"
available at link #149 (last visited June 21, 2011) (Select "State: United States";
"Program: proposed Unemployment Compensation in FY2012"; "Trade Off: All").

40. Hacker and Pierson, Winner-Take-All Politics, 1.

41. Krugman, "Zombie Financial Ideas"; Martin Wolf of the Financial Times has
described it similarly. See Hacker and Pierson, Winner-Take-All Politics, 67.

42. Luigi Zingales, "A Market-Based Regulatory Policy to Avoid Financial Crisis," Cato
Journal 30, no. 3 (Fall 2010): 535.

43- Luigi Zingales has another method not tied to controlling the size of banks. See
ibid., 536.

44. Sebastian Mallaby has argued — powerfully, in my view — that these criticisms of
Wall Street banks don't extend to hedge funds. That's not because hedge funds
are populated with "saints," as Mallaby puts it, but because their "incentives and
culture are ultimately less flawed than those of other financial companies." Sebas-
tian Mallaby, More Money Than God (New York: Penguin Press, 2010), 375. I
agree with this. The problem the past ten years has revealed is not innovation. It
is innovation deployed in a context in which the risks are not borne by the gam-
blers. Hedge funds are not that.

45. Johnson and Kwak, 13 Bankers, 214-15.

46. Roger Lowenstein, The End of Wall Street (New York: Penguin Press, 2010), 291.

47. Tyler Cowen, "The Inequality That Matters," The American Interest (Jan. -Feb.

2011) , 6, available at link #150.

48. Hacker and Pierson, Winner-Take-All Politics, 282.

49. Mallaby, More Money Than God, 378.

50. MapLight, H.R. 4173: Dodd-Frank Wall Street Reform and Consumer Protection
Act, available at link #151; MapLight, S. 3217: Restoring American Financial Stabil-
ity Act of 2010, available at link #152; Center for Responsive Politics, OpenSecrets
.org, Commercial Banks, available at link #153; Center for Responsive Politics,
OpenSecrets.org, Finance/Credit Companies, available at link #154; Center for
Responsive Politics, OpenSecrets.org, Securities and Investment Companies,
available at link #155; Center for Responsive Politics, OpenSecrets.org, Savings
and Loan Institutions, available at link #156; Center for Responsive Politics,
OpenSecrets.org, Credit Unions, available at link #157.

51. Hacker and Pierson, Winner-Take-All Politics, 66.

RepublicLost_HCtextFl.indd 355

8/23/11 1:19:52 AM

356 Notes

52. Center for Responsive Politics, OpenSecrets.org, Pro-Environment Groups
Outmatched, Outspent in Battle over Climate Change Legislation, available at
link #58.

53. The heart of the bill was a mandate that major sources of carbon emissions
obtain a pollution permit for each ton of carbon dioxide or its equivalent that
they emit. Sponsors emphasize that it required "electric utilities to meet 20%
of their electricity demand through renewable energy sources and energy effi-
ciency by 2020." The bill included new spending on "clean energy technologies
and energy efficiency, including energy efficiency and renewable energy ($90 bil-
lion in new investments by 2025), carbon capture and sequestration ($60 billion),
electric and other advanced technology vehicles ($20 billion), and basic scientific
research and development ($20 billion)." It also established new energy-saving
standards for new buildings and appliances. "American Clean Energy and Security
Act," Wikipedia, available at link #158.

54. Center for Responsive Politics, OpenSecrets.org, Lobbying Database, available at
link #159.

55. Ryan Lizza, "As the World Burns: How the Senate and the White House Missed Their
Best Chance to Deal with Climate Change," The New Yorker, Oct. 11, 2010, 12.

56. Robert Reich, "Everyday Corruption," The American Prospect (J une 21, 2010), 8,
available at link #160.

57. Speech of Barack Obama, Philadelphia, Pa., April 2, 2008.

Chapter 12. How So Damn Much Money Defeats the Right

1. Loren Collins, "The Truth About Tytler," available at link #161. Something like this
was certainly a concern among our Framers. John Adams, for example, feared that
if democratic equality were taken too far, "debts would be abolished first; taxes
laid heavy on the rich, and not at all on the others; and at last a downright equal
division of everything be demanded, and voted." Hacker and Pierson, Winner-
Take-All Politics, 77. Tocqueville, too: "The government of the democracy is the
only one under which the power which votes the taxes escapes the payment of
them." Alexis de Tocqueville, Democracy in America, ed. Francis Bowen, trans.
Henry Reeve (Sever and Francis, 1863; 1835), 272.

2. See "How Dismal Is the Financial Future for America and Europe?" available at
link #162.

3. U.S. Department of the Treasury, "The Debt to the Penny and Who Holds It,"
available at link #163 (figure obtained on Sept. 23, 2010). Brian Riedl, "New CBO
Budget Baseline Shows that Soaring Spending — Not Falling Revenues — Risks
Drowning America in Debt," The Heritage Foundation, Aug. 19, 2010, available
at link #164 (calculations based on Congressional Budget Office baseline calcula-
tions).

4. Hacker and Pierson, Winner-Take-All Politics, 78.

5. Timothy F. Geithner et al., 2009 Annual Report of the Boards of Trustees of the
Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust
Funds, 24, available at link #145.

6. Cohn, "How They Did It," 14.

7. Peter S. Goodman, "Treasury Weighs Fixes to Foreclosures Program," New York
Times, Jan. 22, 2010, at Bl. Treasury indicates it lowered the burden by $5 9 billion.

RepublicLost_HCtextFl.indd 356

8/23/11 1:19:52 AM

Notes 357

"Making Home Affordable," U.S. Dep't. of the Treasury, available at link #165 (last
visited June 21, 2011).

8. American Bar Association, "Lobbying Law in the Spotlight: Challenges and Pro-
posed Improvements," Task Force on Federal Lobbying Laws Section of Adminis-
trative Law and Regulatory Practice (J an - 3, 2011), vi, available at link #100.

9. Carter and Grim, "Swiped."

10. Scott Rasmussen, "50% Say Rigged' Election Rules Explain High Reelection Rate
for Congress," Rasmussen Reports 2009, available at link #166.

11. Ibid.

12. Schram, "Speaking Freely," 135-36.
13- Birnbaum, The Money Men, 66.

14. Clawson, Neustadtl, and Weller, Dollars and Votes, 37.

15. Ibid.

16. Birnbaum, The Money Men, 194.

17. Clawson, Neustadtl, and Weller, Dollars and Votes, 36.

18. Kaiser, So Damn Much Money, 315.
19- Schram, "Speaking Freely," 134.

20. Evan Halper, "Maker of Tax Software Opposes State Filing Help," Los Angeles
Times, available at link #167.

21. Ibid.

22. Brian Kelleher Richter, Krislert Samphantharak, and Jeffrey F. Timmons, "Lobby-
ing and Taxes," American Journal of Political Science 53 (2009): 893, 896.

23. Ibid.

24. Ibid., 893, 905.

25. Ibid., 893, 907. And not just taxes. As they also conclude, "firms that lobby are the
primary tax beneficiaries of research and development activities." Ibid., 906.

26. Ibid.

27. Michael J. Graetz, "Paint-by-Numbers Tax Lawmaking," Columbia Law Review 95
(1995): 609, 672.

28. Rebecca Kysar, "The Sun Also Rises: The Political Economy of Sunset Provisions
in the Tax Code," Georgia Law Review 40 (2006): 335, 340.

29. Ibid., 335, 341.

30. Ibid., 335, 358.

31. Ibid., 335, 358-59.

32. Ibid.

33. Ibid., 335, 363-64.

34. Mancur Olson was the father of modern public choice theory. His book The Logic
of Collective Action (1965) explains most powerfully just why special interests
are so powerful.

35. Kysar, "The Sun Also Rises," 335, 365.

36. John D. McKinnon, Gary Fields, and Laura Saunders, " Temporary' Tax Code Puts
Nation in a Lasting Bind," Wall Street Journal, Dec. 14, 2010, available at link
#168.

37. Clawson, Neustadtl, and Weller, Dollars and Votes, 76.

38. Hacker and Pierson, Winner-Take-All Politics, 107.

39. Rajan and Zingales, Saving Capitalism from the Capitalists, 293.

40. Ibid., 276.

RepublicLost_HCtextFl.indd 357

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358 Notes

41. Ibid., 294.

42. Ibid., 10.

43. Adam Smith, Wealth of Nations, ed. Edwin Cannan, vol. 1 (Chicago: University
of Chicago Press, 1976), 144, chapter X ("Of Wages and Profit in the Different
Employment of Labour and Stock"), part II ("Inequalities Occasioned by the Pol-
icy of Europe").

44. Rajan and Zingales, Saving Capitalism from the Capitalists, 9-

45. Ibid.

46. Ibid.,13.

47. Ibid., 18.

48. Ronald J. Pestritto and William J. Atto, American Progressivism: A Reader (Lan-
ham, Md.: Lexington Books, 2008), 274.

49. Urofsky, Louis D. Brandeis, 326.

50. Johnson and Kwak, 13 Bankers, 1 .

51. Pestritto and Atto, American Progressivism, 216.

52. Committee for Economic Development, "Investing in the People's Business: A
Business Proposal for Campaign Finance Reform" (1999), 1.

53. Ibid.

Chapter 13. How So Little Money Makes Things Worse

1. IlyaZemtsov, The Encyclopedia of Soviet Life (Transaction Publishers, 1991), 177;
John Lowenhart, James R. Ozinga, and Erik van Ree, The Rise and Fall of the
Soviet Politburo (London: UCL Press, 1992), 118.

2. Matthew Eric Glassman and Erin Hemlin, "Average Years of Service for Members
of the Senate and House of Representatives, lst-lllth Congresses, Cong. Res. Ser-
vice (Nov. 2, 2010), available at link #169.

3. James R. Ozinga, Thomas W. Casstevens, and Harold T. Casstevens II, "The Cir-
culation of Elites: Soviet Politburo Members, 1919-1987," Canadian Journal of
Political Science 22 (1989): 609, 614.

4. Norman Ornstein, "District of Corruption," The New Republic, available at link
#170.

5. Lisa Rein, "Federal Officials Fight Back over Criticism About Salaries," Washing-
ton Post, Aug. 17, 2010, available at link #171 (describing debate about higher pay
for federal officials).

6. Erika Lovley, "Report: 237 Millionaires in Congress," Politico (Nov. 6, 2009),
available at link #172; Center for Responsive Politics, OpenSecrets.org, Personal
Finance Disclosure, available at link #173.

7. Eric Jackson, "Evan Bayh: Hypocrisy on the Public Option," TheStreet (Oct. 29,
2009), available at link #174.

8. Editorial, "Wife's WellPoint Conflict Puts Bayh's Interests in Question," Indianap-
olis Star, May 25, 2009, A13.

9. Leadership PACS, Open Secrets.org, available at link #175.

10. Birnbaum, The Money Men, 233-34. This is still possible under the current eth-
ics rules. H. Comm. on Standards of Official Conduct, 110th Cong., House Ethics
Manual 47-48 (Comm. Print 2008), available at link #176.

11. "Leadership PACs: PAC Contributions to Federal Candidates," Center for Respon-
sive Politics (April 25, 2011), available at link #177.

RepublicLost_HCtextFl.indd 358

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Notes 359

12. See R. Jeffrey Smith, "Money Intended to Help Candidates Often Ends Up Funding
PACs Themselves," Washington Post, June 2, 2010, available at link #178.

13- Marcus Stern and Jennifer LaFleur, "Leadership PACs: Let the Good Times Roll,"
ProPublica (Sept. 26, 2009), available at link #179.

14. Prime Minister's Public Service Division, Press Release, "Modest Year-End Pay-
ments for Civil Servants" (Nov. 26, 2009), available at link #180.

15. Daniel Schuman, "What's the Average Salary of House Staff?" Open House Project
(Dec. 2, 2009), available at link #181; Erika Lovley, "2,000 House Staffers Make Six
Figures," Politico (Mar. 26, 2010), available at link #182.

16. William P. Barrett, "There's Something About Mary," Forbes, Mar. 11, 2009, avail-
able at link #183; "Securities and Exchange Commission Salaries," Simply Hired
(accessed Sept. 16, 2010), available at link #184.

17. "Salaries in Investment Banking," available at link #185.

18. Though the issue is not uncontested. See Eugene Kiely, "Are Federal Workers
Overpaid? Both Sides in Great Pay Debate Are Misleading the Public," FactCheck
.org (Dec. 1, 2010), available at link #186.

19. See generally Keith A. Bender and John S. Heywood, "Out of Balance? Comparing
Public and Private Sector Compensation over 20 Years" (2010), available at link #187.

20. Jeffrey H. Birnbaum, "The Road to Riches Is Called K Street," Washington Post,
June 22, 2005, available at link #188; Jeanne Cummings, "The Gilded Capital: Lob-
bying to Riches," Politico G une 26, 2007), available at link #189; Arthur Delaney
and Ryan Grim, "On K Street, an Ex-Senate Staffer Is Worth $740,000 a Year," Huff-
ington Post (Sept. 24, 2010), available at link #190.

21. Ornstein, "District of Corruption," 1.

22. See a comparable case of Joel Oswald, who works for Williams and Jensen and
has twenty financial services clients, available at link #191; Public Citizen and the
Center for Responsive Politics, "Banking on Connections: Financial Services Sec-
tor Has Dispatched Nearly 1,500 Revolving Door' Lobbyists Since 2009" (2010),
available at link #192.

23. Birnbaum, The Money Men, 191.

24. Kaiser, So Damn Much Money, 343-44.

25. Eric Lichtblau, "Lobbyist Charged with Hiding Political Donations," New York
Times, Aug. 5, 2010, A12, available at link #193; "104 Will Get You $300 Million,"
New York Times, Feb. 19, 2009, A30, available at link #194. Ryan J. Reilly and Alex
Sciuto, "Despite Donations to Girl Scouts, PMA Lobbyist Gets 27 Months," TPM-
Muckraker (Jan. 7, 2011), available at link #195.

26. Judy Sarasohn, "Special Interests; Of Revolving Doors and Turntables," Washing-
ton Post, Feb. 17, 2000, A29; Recording Industry Association of America, Wikipe-
dia, available at link #196.

27. Lichtblau, "Lobbyist Charged with Hiding Political Donations "; "104 Will Get You
$300 Million."

28. Jordi Blanes i Vidal, Mirko Draca, and Christian Fons-Rosen, "Revolving Door Lob-
byists," Center for Economic Performance Working Paper No. 993 (Aug. 2010).

Chapter 14. Two Conceptions of "Corruption"
1. Randal C. Archibold, "Ex-Congressman Gets 8-Year Term in Bribery Case," New
York Times, Mar. 4, 2006, available at link #197.

RepublicLost_HCtextFl.indd 359

8/23/11 1:19:52 AM

360 Notes

2. David Stout, "Ex-Louisiana Congressman Sentenced to 13 Years," New York Times,
Nov. 13, 2009, available at link #198.

3. Buckley v. Valeo, 424 U.S. 1, 27 (1976).

4. See J. Mark Ramseyer and Eric B. Rasmussen, "Skewed Incentives: Paying For Poli-
tics as a Japanese Judge, " Judicature 83 (2000): 190.

5. James J. Sample, "Justice for Sale," Wall Street Journal online (Mar. 22, 2008),
available at link #199.

6. Justice Sandra Day O'Connor, "How to Save Our Courts," Parade, Feb. 24, 2008,
available at link #200.

7. Ibid, (emphasis added).

8. Sample, "Justice for Sale," A24.

9. James J. Sample, "Democracy at the Corner of First and Fourteenth: Judicial Cam-
paign Spending and Equality " (Aug. 20, 2010), 23 (forthcoming in NYU Annual
Survey of American Law); Hofstra Univ. Legal Studies Research Paper No. 10-29,
available at link #89.

10. David Pozen, James Sample, and Michael Young, "Fair Courts: Setting Recusal
Standards," 11, available at link #201.

11. Sample, "Democracy at the Corner," 20; Hofstra Univ. Legal Studies Research
Paper No. 10-29, available at link #89.

12. Report of Stanford Law Student, Spring 2009, on file with author.

13. Stephen J. Ware, "Money, Politics and Judicial Decisions: A Case Study of Arbitra-
tion Law in Alabama," Capital University Law Review 30 (2002): 583, 584.

14. Adam Liptak and Janet Roberts, "Campaign Cash Mirrors a High Court 's Rulings,"
New York Times, Oct. 1, 2006, Al.

15. Adam Liptak, "Looking Anew at Campaign Cash and Elected Judges," New York
Times, Jan. 29, 2008, A14, available at link #202.

16. It isn't quite accurate historically to speak of both the House and Senate in this
way, since the Senate was originally appointed by state legislatures. My analysis
translates the view of the House to the norms for the now-elected Senate.

17. Sam Issacharoff advances a distinct conception of corruption that roughly paral-
lels my sense of dependence corruption. He focuses upon the "clientelist" rela-
tion between "elected officials and those who seek to profit from relations to the
state," Samuel Issacharoff, "On Political Corruption," Harvard Law Review 124
(2010): 121, the result of which is a "distortion of political outcomes as a result of
the undue influence of wealth" (Ibid., 122).

18. Buckley v. Valeo, 424 U.S. 1, 47 (1976).

19- Clawson, Neustadtl, and Weller, Dollars and Votes, 4.

20. "Geography Data 2008 Race: Massachusetts Senate," Center for Responsive Poli-
tics (Jury 13, 2009), available at link #203.

21. Spencer Overton, "The Participation Interest," Georgetown Law Journal (Forth-
coming, 2012): 6.

22. Ibid., 3-4.

23. John Joseph Wallis, "The Concept of Systematic Corruption in American
History," University of Maryland and National Bureau of Economic Research
(2005), 4.

24. Ibid., 23.

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Notes 361

25. Ibid., 3-4.

26. Ibid.

27. Ibid., 52.

28. Ibid., 50, quoting Benjamin Parke DeWitt.

29- This recognition was born at the turn of the century, as "muckrakers" made the cor-
porate control of politics tangible and widely known for the first time. As Richard
McCormick describes, "[t]hat businessmen systematically corrupted politics was
incendiary knowledge; given the circumstances of 1905, it could hardly have failed
to set off an explosion." "The Discovery That Business Corrupts Politics: A Reap-
praisal of the Origins of Progressivism," 247, 270. Progressives split on what to do
about this fundamental fact of American politics — with the followers of Roosevelt
arguing for bigger government to match the influence of business, and followers of
Wilson/Brandeis arguing for stronger laws to limit the size of business. Whether
any solution was possible, TR's was particularly naive. But my point is not the wis-
dom in the remedies; it is the commonality of the motivation. See also Brooks, Cor-
ruption in American Politics and Life (1910) (pointing to campaign contributions
as the source of corruption, and advancing a small-dollar alternative). For an out-
standing early history of the influence of money in elections, see Anthony Corrado,
The New Campaign Finance Source Book (2004), chap. 1, available at link #204.

30. Wallis, "The Concept of Systematic Corruption in American History," 48.

31. Ibid.

32. Huffington, Third World America, 58-59; Hacker and Pierson, Winner-Take-All
Politics, 51.

33- See Barry Ritholtz, Top 10 Hedge Fund Managers 2009 Salary, The Big Picture
(April 1, 2010), available at link #75; Hacker and Pierson, Winner-Take-All Poli-
tics, 228.

34. Kaiser, So Damn Much Money, 267. See also Hacker and Pierson, Winner-Take-
All Politics, 207.

35. Ibid., 267.

36. Ibid., 272.

37. Ibid., 264.

38. "Tom DeLay Convicted of Money Laundering," FOXNews.com (Nov. 24, 2010),
available at link #205.

39- Kaiser, So Damn Much Money, 270-71.

40. Ibid., 149.

41. Ibid., 346.

42. Center for Responsive Politics, available at link #206 (last visited June 21, 2011)
(For the 2010 election cycle, independent expenditures totaled $210,912,167. Just
four years prior, in 2006, independent expenditures totaled $37,394,589).

43- It is for this reason that I am skeptical of the utility of efforts to try to "reverse"
Citizens United by denying corporate personhood. The root problem is an influ-
ence that drives representatives away from a focus on "the People alone." Even if
a reform were to achieve the reversal of corporate personhood, that wouldn't by
itself change the existing skew of influence.

44. Of course not all courts are this enlightened. In Miles v. City of Augusta, 710 F.2d
1542 (11th Cir. 1983), the Court refused "to hear a claim that" a talking cat's First

RepublicLost_HCtextFl.indd 361

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362 Notes

Amendment rights had been infringed, finding the cat not a "person" under the
Fourteenth Amendment.

45. 494 US 652, 660 (1990).

46. Eric Uslaner has a compelling argument about how corruption relates to inequal-
ity. See Eric M. Uslaner, Corruption, Inequality and Trust, Handbook on Social
Capital, Gert Tinggaard Svendsen and Gunnar Lind, eds. (2011). But the argu-
ment is causal. My point here is conceptual: the corruption of representative
democracy is distinct from inequality in speech or resources within a representa-
tive democracy.

47. Birnbaum, The Money Men, 34.

48. Wallis, "The Concept of Systematic Corruption," 37.

49. John G. A. Pocock, Virtue, Commerce, and History: Essays on Political Thought
and History, Chiefly in the Eighteenth Century (Cambridge University Press,
1985), 78.

50. Not every Framer was necessarily convinced of this need. Indeed, Alexander
Hamilton, faced with the real task of inspiring a nation to pay its bills (both the
government to pay its debtors, and the people to pay their taxes), thought the
British form of "corruption" may actually be quite useful for a republic. According
to a suggestion by Senator William Maclay (D-Pa.; 1789-1791), in order to secure
the votes to get Congress to assume the Revolutionary War debts, Hamilton gave
congressmen with inside knowledge the chance to send "stagecoaches all over
the South and West buying up federal and state notes at fractions of their face
value." Painter, Getting the Government America Deserves, 164. Jefferson com-
plained to Washington directly about this. In his Anas, Jefferson reports telling
Washington:

That it was a fact, as certainly known as that he and I were then conversing,
that particular members of the legislature, while those laws were on the car-
pet, had feathered their nests with paper, had then voted for the laws

[That this was a case of] a legislature legislating for their own interests, in
opposition to those of the people

[T] hat these measures had established corruption in the legislature, where
there was a squadron devoted to the nod of the Treasury, doing whatever he
had directed, and ready to do what he should direct

[That] there was great difference between the little accidental scheme of
self interest, which would take place in every body of men, and influence their
votes, and a regular system for forming a corps of interested persons, who
should be steadily at the orders of the Treasury. . . .

I confirmed [Washington] in the fact of the great discontents to the south;
that they were grounded on seeing that their judgments and interests were
sacrificed to those of the eastern States on every occasion, and their belief that
it was the effect of a corrupt squadron of voters in Congress, at the command
of the Treasury. . . .

Thomas Jefferson, The Complete Anas, ed. Franklin B. Sawvel (Round Table
Press, 1903; 1792), 54-55, 85, 91, 104-5.

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Notes 363

51. Citizens United v. Fed. Election Comm'n, 130 S. Ct. 676, 910 (2010) (quoting
McConnell v. Fed. Election Comm'n, 540 U.S. 93, 297 [2003] [opinion of Ken-
nedy, J.]) (emphasis added).

52. Speech of Barack Obama, Feb. 10, 2007, available at link #207.

53. Citizens United v. Fed. Election Comm'n, 130 S. Ct. 676, 910 (2010).

54. "Congress Ranks Last in Confidence in Institutions," July 22, 2010, available at link #1.

Part IV. Solutions

1. 145 Cong. Rec. 25517 (daily ed., Oct. 15, 1999) (statement of Sen. Tom Daschle cit-
ing Sen. Barry Goldwater).

2. Casey Bayer, "Jon Stewart and Bill O'Reilly Bond over Campaign Corruption,"
Christian Science Monitor, Sept. 28, 2010, available at link #208.

Chapter 15. Reforms That Won't Reform

1. Clifford D. Tyree, "History and Description of the EPA Motor Vehicle Fuel Econ-
omy Program" (EPA Report No. EPA-AA-CPSB-82-02) (1982), 2-3. I was inspired
to this powerful and subtle view of transparency by Archon Fung, Mary Graham,
and David Weil, Full Disclosure: The Perils and Promise of Transparency (Cam-
bridge University Press, 2007).

2. Center for Responsive Politics, Top 100 Contributors: Representative Michael E.
Capuano 2009-2010, OpenSecrets.org, available at link #209.

3. Public Citizen, "Disclosure Eclipse: Nearly Half of Outside Groups Kept Donors
Secret in 2010"; "Top 10 Groups Revealed Sources of Only One in Four Dollars
Spent 3" (Nov. 18, 2010), available at link #210.

4. Marcos Chamon and Ethan Kaplan, "The Iceberg Theory of Campaign Contribu-
tions: Political Threats and Interest Group Behavior" (April 2007), 2-5, available
at link #211.

5. Interview with Larry Pressler, June 16, 2011 (on file with author).

6. "Cause for Concern: More than 40% of Hill Staffers Responding to Public Citizen
Survey Say Lobbyists Wield More Power Because of Citizens United" Public Citi-
zen (May 2011), 6-9, available at link #212.

7. See Jack Beatty, ^Ige of Betrayal (New York: Vintage, 2007), 216.

8. Bruce Ackerman and Ian Ayres, Voting with Dollars: A New Paradigm for Cam-
paign Finance (New Haven: Yale University Press, 2004), 48-50, 102-4. Ian Ayres
first introduced the idea of an anonymous donation booth with Jeremy Bulow
in "The Donation Booth: Mandating Donor Anonymity to Disrupt the Market for
Political Influence," Stanford Law Review 50 (1998): 837.

9- In 1972, Dade County established the "Dade Judicial Trust Fund" for all Dade
County judicial elections. The trust was blind, the funds were solicited from all
practicing members of the bar in Dade County, and the funds were distributed
on a pro rata basis to each "qualified" judicial candidate in the county. The trust
failed soon after it was adopted due to (i) a lack of attorney participation (dona-
tions), and (ii) criticism that the fund distributed funds to all qualified judicial
candidates, thereby disallowing attorneys from directing contributions to partic-
ular candidates. In 1972 the fund received just over $30,000 from three hundred
attorneys. In 1974 the fund received just over $61,000, and was disbanded shortly

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364

Notes

thereafter. See Roy A. Schotland, "Elective Judges' Campaign Financing: Are State
Judges' Robes the Emperor's Clothes of American Democracy? " Journal of Law
and Politics 2 (1985): 57, 124, 100-104 (admitting that "[djespite having begun
this project enthusiastic about non-disclosure of lawyers' giving as a reform mea-
sure, after considering these factors, I find it neither worth doing nor doable").
See also Leona C. Smoler and Mary A. Stokinger, "Note: The Ethical Dilemma of
Campaigning for Judicial Office: A Proposed Solution," Fordham Urban Law
Journal 14 (1986): 353, 364.

Chapter 16. Reforms That Would Reform

1. Brooks, Corruption in American Politics and Life, 228.

2. For a review of these different reforms, see U.S. Gov't Accountability Office,
"GAO-10-390, Campaign Finance Reform: Experiences of Two States That
Offered Full Public Funding for Political Candidates" (2010), available at link
#213 (supplemental report available at link #214); Michael G. Miller, "After the
GAO Report: What Do We Know About Public Election Funding?" working paper
(2010), available at link #215; Stevin M. Levin, "Keeping it Clean: Public Financ-
ing in American Elections," Center for Governmental Studies (2006), available at
link #216; Neil Malhorta, "The Impact of Public Financing on Electoral Compe-
tition: Evidence from Arizona and Maine," State Politics and Policy Quarterly
8 (2008): 263-81; Peter L. Francia and Paul S. Herrnson, "The Impact of Public
Finance Laws on Fundraising in State Legislative Elections," American Political
Research 31 (Sept. 2003): 5; Raymond La Raja, "Candidate Emergence in State
Legislative Elections: Does Public Funding Make a Difference?" paper prepared
for the Temple-IPA State Politics and Policy Conference (May 2008), available at
link #217; Kenneth R. Mayer and Timothy Werner, "Public Election Funding, Com-
petition, and Candidate Gender," PS: Political Science and Politics XL, no. 4 (Oct.
2007), available at link #218; Thomas Stratmann, "The Effect of Public Financing
on the Competitiveness of Elections," George Mason University-Buchanan Center
Political Economy, CESifo (Center for Economic Studies and Ifo Institute for Eco-
nomic Research) working papers series, May 7, 2009, available at link #219; Maine
Comm'n on Gov. Ethics and Election Practices, "Maine Clean Election Act: Over-
view of Participation Rates and Payments, 2000-2008" (2008), available at link
#220; Conn. State Elections Enforcement Comm'n, "The Status of the Citizens'
Election Fund as of December 31, 2009" (2009), available at link #221; Conn. State
Elections Enforcement Comm'n, "Projected Levels of Candidate Participation and
Public Grant Distribution for the 2010 Citizens' Election Program," available at
link #222; and Kenneth R. Mayer and Timothy Werner, "Electoral Transitions in
Connecticut: The Implementation of Clean Elections in 2008," paper presented
at the Annual Meeting of the American Political Science Association, available at
link #223.

3. The leading scholarship examining campaign finance reform is varied and deep.
Among the leading articles are Samuel Issacharoff and Pamela S. Karlan, "The
Hydraulics of Campaign Finance Reform," Texas Law Review 77 (1998): 1705;
Lillian R. BeVier, "Money and Politics: A Perspective on the First Amendment
and Campaign Finance Reform," California Law Review 73 (1985): 1045; Brad-
ley A. Smith, "Faulty Assumptions and Undemocratic Consequences of Campaign

RepublicLost_HCtextFl.indd 364

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Notes

365

Finance Reform," Yale Law Journal 105 (1996): 1049; David A. Strauss, "Corrup-
tion, Equality, and Campaign Finance Reform," Columbia Law Review 94 (1994):
1369; Edward B. Foley, "Equal-Dollars-Per-Voter: A Constitutional Principle of
Campaign Finance," Columbia Law Review 94 (1994): 1204; Richard L. Hasen,
"Clipping Coupons for Democracy: An Egalitarian/Public Choice Defense of Cam-
paign Finance Vouchers," California. Law Review 84 (1996): 1; Daniel Hays Low-
enstein, "On Campaign Finance Reform: The Root of All Evil Is Deeply Rooted,"
Hofstra Law Review 18 (1989): 301; Fred Wertheimer and Susan Weiss Manes,
"Campaign Finance Reform: A Key to Restoring the Health of Our Democracy,"
Columbia Law Review 94 (1994): 1126; Andrea Prat, "Campaign Spending with
Office-Seeking Politicians, Rational Voters, and Multiple Lobbies," Journal of
Economic Theory 103 (Mar. 2002): 162; Stephen Coate, "Pareto-Improving Cam-
paign Finance Policy," American Economic Review 94 (J une 2004): 628; Lillian
R. BeVier, "Campaign Finance Reform: Specious Arguments, Intractable Dilem-
mas," Columbia Law Review 94 (1994): 1258; Bradley A. Smith, "Money Talks:
Speech, Corruption, Equality, and Campaign Finance," Georgetown Law Journal
86 (1997): 45; Daniel R. Ortiz, "The Democratic Paradox of Campaign Finance
Reform," Stanford Law Review 50 (1997): 893; Kathleen M. Sullivan, "Against
Campaign Finance Reform," Utah Law Review (1998): 311; and Spencer Overton,
"Donor Class: Campaign Finance, Democracy, and Participation," University of
Pennsylvania Law Review 153 (2004): 73.

The proposal I advance here is focused less on restricting speech than the
reforms criticized by Smith and BeVier. It shares the concern with corruption
advanced by Lowenstein. Like Issacharoff and Karlan, I view the challenge as
dynamic: What is the economy of influence reform will produce? Like Sullivan,
I avoid reforms that would restrict important First Amendment values. And like
Overton, I believe a key value must be the promotion of participation. Strauss bril-
liantly demonstrates how corruption, which is a derivative concept, derived from a
concern about unequal power in the electoral speech market. As my analysis makes
clear, however, while I agree with his diagnosis, I believe it is a mistake to frame the
concern as one of equality alone. As I describe, equality, too, is a derivative concept,
derived from the notion of a democracy "dependent upon the People alone."

4. As will be clear, the mode of reform that I am pushing does not "call for greater
regulation" of speech. See Issacharoff and Karlan, "The Hydraulics of Campaign
Finance Reform," 1711, as I share their concern that such reforms "exacerbate the
already disturbing trend toward politics being divorced from the mediating influ-
ence of candidates and political parties." Ibid, 1714. The thrust of the reforms I
advance here would increase the available speech resources within an election,
and does not depend upon restricting the speech of anyone.

5. David Leonhardt, "Who Doesn't Pay Taxes?" New York Times Economix Blog
(April 13, 2010), available at link #224; see also Congressional Budget Office, His-
torical Effective Federal Tax Rates: 1979-2006 (April 2009), available at link #225.

6. For readers of Bruce Ackerman and Ian Ayres, Voting with Dollars, this solution
will seem familiar. I draw heavily upon their insights, though the contours to my
framework are different. The idea of a voucher was also described extensively
by Richard Hasen in "Clipping Coupons for Democracy." Hasen distinguishes
between a "level [ing] -up" and a "level [ing] -down" approach. Ibid., 20. A voucher

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366 Notes

system is the former; limits on expenditures or contributions are the latter.
Hasen's own proposal mixes both. Ibid., 20-27, though he wrote this before the
Court made it clear that Congress has no power to limit independent campaign
expenditures in the name of "equality." Ibid., 39-44. See Citizens United v. Fed.
Election Comm'n, 130 S. Ct. 676 (2010) (reversing Austin v. Michigan Chamber
of Commerce, 494 U.S. 652 [1990]).

As Hasen notes, Senator Lee Metcalf proposed a voucher plan in 1967. Hasen,
"Clipping Coupons for Democracy," 20.

7. Brooks, Corruption in American Politics and Life, 263.

8. See Randall v. Sorrell, 548 U.S. 230 (2006), which invalidated Vermont's limit of
$400 to candidates.

9. Spencer Overton, "The Participation Interest," Georgetown Law Journal (Forth-
coming: 2012): 3-4.

10. See Cato Handbook for Policymakers, chap. 26.

11. Nathaniel Persily and Kelli Lammie, "Perceptions of Corruption and Campaign
Finance: When Public Opinion Determines Constitutional Law," University of
Pennsylvania Law Review 153 (2004): 119, available at link #226.

12. This is strong insight in Issacharoff and Karlan, "The Hydraulics of Campaign
Finance Reform," Texas Law Review 77 (1998): 1705. For the best mapping of the
complexities, see the work of Anthony Corrado, especially The New Campaign
Finance Sourcebook (Washington, D.C.: Brookings Institution Press, 2005) (with
Thomas E. Mann, Daniel R. Ortiz, and Trevor Potter).

13. Brooks, Corruption in American Politics and Life, 99.

Chapter 18. Strategy 2
1. This idea was suggested to me by Matt Gonzalez, Ralph Nader's vice-presidential
candidate.

Chapter 19. Strategy 3

1. Jake Tapper and Sunlen Miller, "President Obama's $8 Billion Earmark Rerun: Les-
son Not Learned?" ABCNews, Political Punch (Dec. 15, 2010), available at link
#227.

2. Speech of Governor Buddy Roemer, Harvard University, March 24, 2011.

3. See Paolo E. Coletta, William Jennings Bryan: Political Evangelist, 1860-1908
(Lincoln: University of Nebraska Press, 1864), 272.

Chapter 20. Strategy 4

1. Teachout, "The Anti-Corruption Principle," 341, 348 (citing Notes of James Madi-
son [Aug. 14, 1787] The Records of the Federal Convention of 1787, vol. 2, pp.
282, 288).

2. Ibid., 349 (citing Patrick Henry, "Speech on the Expediency of Adopting the Fed-
eral Constitution" [June 7, 1788], in Eloquence of the United States, ed. E. B. Wil-
liston, vol. 1 [1827], 178, 223).

3. Ibid., 348 (citing Notes of Robert Yates [June 23, 1787] , in The Records of the Fed-
eral Convention of 1787, vol. 1, pp. 391, 392).

RepublicLost_HCtextFl.indd 366

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Notes 367

4. Tfee Federalist No. 40 (James Madison), 240-41 (quoting the Congress's charge to
the Constitutional Convention).

5. Lash, "Rejecting Conventional Wisdom," 197, 221-22.

6. Ibid., 197, 212.

7. Paul J. Weber and Barbara A. Perry, Unfounded Fears (Santa Barbara, Calif. : Prae-
ger, 1989), 56-60.

8. Congressional Research Service, CRS 95-589 A, "Amending the U.S. Constitution:
By Congress or by Constitutional Convention'' (May 10, 1995), 11, available at link
#228; Cyril F. Brickfield, "Problems Relating to a Federal Constitutional Conven-
tion," Committee on the Judiciary, House of Representatives (July 1. 1957), 7.

There are some who question whether the threat of a convention really did
cause the Senate to act. See James Kenneth Rogers, "The Other Way to Amend
the Constitution," Harvard Journal of Law and Public Policy 30 (2007): 1005,
1008 (citing Russell L. Caplan, Constitutional Brinksmanship: Amending the
Constitution by National Convention (1988), 65: [T]here remains no evidence
that the convention threat by itself forced the Senate to approve the [Seventeenth
A]mendment. At least as influential was the growing quota of senators chosen
by popular vote"); Kris W. Kobach, "Rethinking Article V: Term Limits and the
Seventeenth and Nineteenth Amendments," Yale Law Journal 103 (1994): 1971,
1976-80 (arguing that the growing proportion of senators elected by popular
vote was the "most influential [factor] in finally winning a formal amendment to
the U.S. Constitution").

This wasn't the only time a convention threat forced a constitutional amend-
ment. Indeed, the threat of a second constitutional convention "was a key fac-
tor in Congress proposing the Bill of Rights." James Kenneth Rogers, "The Other
Way to Amend the Constitution," Harvard Journal of Law and Public Policy 30
(2007): 1005, 1008. And beyond the Seventeenth Amendment, there are three
other amendments in the twentieth century "that may be traced to convention
call movements": the Twenty-first Amendment (repealing Prohibition), Twenty-
second Amendment (setting limits on presidential terms), and the Twenty-fifth
Amendment (clarifying presidential succession). Weber and Perry, Unfounded
Fears (Santa Barbara, Calif: Praeger, 1989), 75. Other issues inspiring a large
convention movement have included petitions on the income tax (between 1939
and 1963), polygamy (1906-1916), and legislative reapportionment (1963-1969).
Weber and Perry, Unfounded Fears, 61-67. Michael J. Molloy, "Confusion and a
Constitutional Convention," Western State University Law Review 12 (1985):
793, 794.

9. The most ambitious recent discussion of a call for a constitutional convention is
Larry Sabato's^4 More Perfect Constitution (2007), which describes twenty-three
proposals for changes that he would have a convention consider. A call for partial
public funding of elections is among Sabato's proposals.

10. See Sanford Levinson, Our Undemocratic Constitution: Where the Constitution
Goes Wrong (And How We the People Can Correct It) ("Most liberals these days
appear to be fully Madisonian in being close to terrified of the passions of their
fellow citizens. They envision a runaway convention that would tear up the most
admirable parts of the convention. . .") (Oxford University Press, 2008), 174-75;

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368

Notes

Larry Greenley, "States Should Enforce, Not Revise, the Constitution! " New Amer-
ican (Nov. 29, 2010), available at link #229 (warning that a constitutional con-
vention "may become a runaway convention' that drastically alters our form of
government, or throws out the Constitution altogether and establishes an entirely
new system of governance"); but see "Amending the Constitution by the Conven-
tion Method," Heritage Foundation (Mar. 8, 1988), 4-89, available at link #230
(debunking the "myth of the runaway convention").

11. Bruce Ackerman, "Unconstitutional Convention," New Republic (Mar. 3, 1979),
8; Russell L. Caplan, Constitutional Brinksmanship: Amending the Constitu-
tion by National Convention (Oxford University Press, 1988); David Castro,
"A Constitutional Convention: Scouting Article Five's Undiscovered Country,"
University of Pennsylvania Law Review 134 (1986): 939; Walter E. Dellinger,
"The Recurring Question of the Limited' Constitutional Convention," Yale Law
Journal 88 (1979): 1623; Walter E. Dellinger, "Who Controls a Constitutional
Convention? A Response," Duke Laiv Journal (1979): 999; Gerald Gunther, "The
Convention Method of Amending the United States Constitution," Georgia Law
Review 14 (1979): 1; Lash, "Rejecting Conventional Wisdom," 197; Michael J. Mol-
loy, "Confusion and a Constitutional Convention," Western State University Law
Review 12 (1985): 793; John T. Noonan, "The Convention Method of Constitu-
tional Amendment: Its Meaning, Usefulness, and Wisdom, Pacific Law Journal 10
(1979): 641; Michael B. Rappaport, "Reforming Article V: The Problems Created
by the National Convention Amendment Method and How to Fix Them," Virginia
Law Revieiv 96 (2010): 1509; James K. Rogers, "The Other Way to Amend the
Constitution: The Article V Constitutional Convention Amendment Process,"
Harvard Journal of Laiv and Public Policy 30 (2007): 1005; Ronald D. Rotunda
and Stephen J. Safranek, "An Essay on Term Limits and a Call for a Constitutional
Convention," Marquette Law Review 80 (1996): 227; Laurence H. Tribe, "Issues
Raised by Requesting Congress to Call a Constitutional Convention to Propose a
Balanced Budget Amendment," Pacific Law Journal 10 (1979): 627; William W.
Van Alstyne, "Does Article V Restrict the States to Calling Unlimited Conventions
Only? A Letter to a Colleague," Duke Law Journal (1978): 1295; William W. Van
Alstyne, "The Limited Constitutional Convention: The Recurring Answer," Duke
Law Journal (1979): 985.

12. Weber and Perry, Unfounded Fears, 74-75.

13. William W. Van Alstyne, "The Limited Constitutional Convention: The Recurring
Answer," Duke Law Journal 4 (1979): 985, 987. See also Lash, "Rejecting Conven-
tional Wisdom," 197, 202 (describing Randolph plan).

14. Weber and Perry, Unfounded Fears, 59-60.

15. The argument for the power of Congress to control a convention was laid out fully
more than fifty years ago by Cyril Brickfield, an attorney working for the House
Committee on the Judiciary. After an exhaustive analysis of the history of con-
stitutional conventions, Brickfield concludes that a convention exercises its will
"within the framework set by the congressional act calling it into being." Cyril F.
Brickfield, "Problems Relating to a Federal Constitutional Convention," Commit-
tee on the Judiciary, House of Representatives (July 1. 1957), 18. "A convention,"
Brickfield writes, "is an instrument of government and acts properly only when
it stays within the orbit of its powers." "[T]o act validly," it would "have to stay

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Notes 369

within the designated limits of the congressional act which called it into being"
(Ibid., 18). That conclusion is only buttressed by the express statement of the Nec-
essary and Proper Clause (Ibid., 19).

16. Constitutional Convention Implementation Act of 1985, Senate Bill 40, 99th Cong.
1st Sess. (1985).

17. Senate Bill 40, §7(a).

18. Walter E. Dellinger, "The Recurring Question of the Limited' Constitutional Con-
vention," Yale Law Journal 88 (1979): 1623, 1633.

19. This was the basis for Judge John A. Jameson's conclusion in 1867 that conven-
tions could be limited. See Weber and Perry, Unfounded Fears, 60.

20. Lash, "Rejecting Conventional Wisdom," 197, 213-

21. Indeed, some members thought even talking about proposals beyond amending
the articles of convention "must end in the dissolution of the powers" of the con-
vention. Weber and Perry, Unfounded Fears, 23-24.

22. Ibid., 26.

23. Ibid., 107-8.

24. Hacker and Pierson, Winner-Take-All Politics, 109-

25. Ibid.

26. Ibid.

27. See, for example, James S. Fishkin, The Voice of the People (New Haven, Conn.:
Yale University Press, 1995). For a related device, see Mark E. Warren, "Two Trust-
Based Uses of Minipublics in Democracy," American Political Science Association
meeting (Sept. 2009).

28. "Poll Finds Only 33% Can Identify Bill of Rights," New York Times, Dec. 15, 1991,
A33. See also Pew Research Center for the People and the Press, "Well Known:
Twitter; Little Known: John Roberts" (2010), available at link #231.

Conclusion

1. Makinson, "Speaking Freely," 153.

2. "The 400 Richest Americans 2009," available at link #232.

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RepublicLost_HCtextFl.indd 370 {g} 8/23/11 1:19:52 AM

Index

Abramoff, Jack, xi, xii, 8
Abrams, Samuel, 98
access, 145-47, 224-25

Citizens United decision and perception

of, 243-44
Ackerman, Bruce, 262, 343n, 365ra
Adams, John, 356n
agenda distortion, 151-52, 164
Agriculture Department, U.S., 50
Alexander, Rodney, 220
American Bar Association's Task Force on

Federal Lobbying Laws, 118-19, 195
American Jobs Creation Act of 2004, 117
American National Election Studies, 167
Andreas, Dwayne, 45-46
Andrews, Wright, 138
Anheuser-Busch InBev, 177
anonymity (anonymous donations), 114,

120, 260-63, 363«
Ansolabehere, Stephen, 135-37, 148, 159
antibiotics, and cattle, 49-50, 333«
anti-free-market interventions, 46-52
antitrust doctrine, 178, 210-11
antitrust trial, of Microsoft, 31-32
Archer Daniels Midland (ADM), 45-46,

48-49
Arendt, Hannah, 6

Arizona, public funding system, 264-65,
273, 364w

Article I of the Constitution, 18, 129, 295
Article IV of the Constitution, 127-28
Article V convention, 290-304, 325,
367-69n

Article XIII of the Constitution, 290-91
Arvey, Jake, 110
asset-price inflation, 70, 80-81
August Putsch (1991), 13-14

Austin v. Michigan, 240-41
Ayres, Ian, 262, 343«, 363», 365«

i Bacchus, Jim, 100, 348«
Baker, Dean, 186-87
Baker, Meredith Attwell, 223
Banality of Evil, The (Arendt), 6
Banking Act of 1933 (Glass-Steagall Act),

69, 73
Bankman, Joe, 201
Bank of the United States, 102, 210
banks (banking industry). See also
financial crisis
debit card swipe fees, 164-66
Bannister, Roger, 92
Bartels, Larry, 152
Baucus, Max, 99-100
Baumgartner, Frank, 135, 142-43, 150,

166, 352w
Bayh, Evan, 216
Bayh, Susan, 216
Beck, Glenn, 207
Becker, Gary, 194
Benkler, Yochai, 108-9
BeVier, Lillian R., 364-65rc
Biden, Joe, 182-83

big government and Reagan, 187, 192-96
Bill of Rights, 303, 367rc
biofuels, 50-51

Birnbaum, Jeffrey, 113, 123, 149, 159, 163,

168, 199, 219
Blagojevich, Rod, xi
Blanchard, James, 150
Blanes i Vidal, Jordi, 225
Boehner, John, 220
Born, Brooksley, 74-76
bottled tap water, 177

371

RepublicLost_HCtextFl.indd 371

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372 Index

Bovard, James, 50

Bowditch, Phebe Lowell, 34lra

BPA (Bisphenol A), 22-26, 329«

Bradley, Bill, 134

Brandeis, Louis, 3, 210, 234, 36l«

bribery, 7-8, 106-7, 116, 215, 226-27

Brickell, Mark C, 72-73

Brickfield, Cyril, 368-69«

Broadland, 153-56

Bronfman, Edgar, Jr., 314

Brooks, Robert, 120-21, 132, 264, 271

Brown, Jerry, 200

Buckley, William R, 93, 246

Buckley v. Valeo, 227, 252, 267

bundling (bundled contributions), 119,

120, 121, 258-59, 270-71, 344«
Bush, George H. W., 212
Bush, George W., 47, 119, 181, 205-6,

280-81, 288
Butler, Pierce, 328«
Buttenwieser, Peter, 310
Byrd, Robert, 113, 139, 347-48»
Byrne, David, 190
Byrne, Leslie, 148

California, ReadyReturn program,

200-201
CallAConvention.org, 325
campaign contributions, 91-107

anonymity in, 260-63

carbon pollution and, 58-60

demand for, 92-96

Democrats and, 96-98

disclosure and transparency in, 252-59

distortions of, 142-66

distraction of, 138-42

farm subsidies and, 51-52

financial system and, 81-86, 189-90

gift and exchange economies and,
107-24

legislative voting patterns and, 125-27,

134-38, 150-51, 159, 170-71
new norms in, 99-100
new suppliers of, 100-107
public survey on attitude toward, 88
the Right and, 197-98
small-donor, 264-72, 283-84, 324-25
supply of, 96-107

teachers' unions and education and,
66-67

threats vs. incentives, 258-60
campaign finance disclosure, 225, 252-59

campaign finance reform, xi-xii, 34l«.

See also reforms
leading scholarship, 364-65n
presidential candidates and, 280-89
primary challenge candidacies and,

276-79

small-dollar-funded elections and,
264-72

campaign finance regulations, 238-46,
36l»

campaign spending, 51-52, 91-92, 338n
Campbell's Soup Company, 177
cancer and cell phone radiation, 26-27,

329n
Cantor, Eric, 220
cap-and-trade, 59, 191, 356n
Capuano, Mike, 252-57
carbon pollution, 56-60, 190-91, 356w
Cardozo, Benjamin N., 73
Carlyle Group, 8
carried interest, 235-36
Carter, Jimmy, 1, 47, 81, 193
Carter, Zach, 164-66, 197
Cassidy, Gerald S. J., 112-13
"cat houses," 101
Cato Institute, 269

cattle, and corn subsidies, 49-50, 333re
cell phone radiation, 26-28, 329w
Cemex, 177

Center for Competitive Politics, 136-37
Center for Responsive Politics, 133-34, 218
Challenger disaster (1986), 14
challengers, in primaries, 276-79
Chamon, Marcos, 258-60
Charles II of England, 19
Chevron/Texaco, 47

children, and consumer-safety laws, 21-26
Chinn, Menzie D., 335w
citizen-owned elections, 276-79
citizenship, and the Framers, 127-28
Citizens United v. FEC, 144, 158, 167,

238-45, 259, 271-72, 315-16
civil rights, 93-94
Civil Rights Act of 1964, 92, 93
Clawson, Dan, 96, 119, 122, 146, 198-99,

341-42w
climate change, 57-60, 190-91
Clinton, Bill, 14, 73-74, 96, 174-75, 309-11
Clinton, Hillary, 174, 185, 240, 281
coal mining, 58-59
Coburn, Tom, 125, 126, 170
Coelho, Tony, 238

RepublicLost_HCtextFl.indd 372

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Index 373

cognitive capture, 82
cognitive dissonance, 26
Cohn, Jonathan, 183-84
Colgate-Palmolive, 177
Comcast, 222-23

Committee for Economic Development

(CED), 212-13
committee meetings, 139-40, 348»
commodification, 108-9
Commodity Futures Modernization Act of

2000, 75-76
Commodity Futures Trading Commission

(CFTC), 72-76, 77
Communications Act of 1934, 197, 236
concentrated markets, 176-78
conflicts of interest, 29-33, 87
Congress, U.S. See also specific laws and

members of Congress
benefits of working for members, 221-25
campaign cash. See campaign

contributions
campaign finance disclosure and,

257-58

campaign spending and, 51-52, 91-92
constitutional convention and, 293,

298-300
decency of members, 38-39
distortions of fund-raising, 142-66
distractions of fund-raising, 138-42
lobbying life after, 123-24, 217-18, 274
loss of confidence in, 2-3, 247, 346«
loss of trust in, 9, 41-42, 166-70, 243,

353w

new norms in, 99-100
reform president and, 282-83, 286-88
regulating corruption, 227-28, 245-46
safe seats and, 97-98, 276, 339»
salaries. See congressional pay
tenure in, 214-15

voting patterns and campaign money,
125-27, 134-38, 159, 170-71
congressional pay, 214-25
of staff members, 221-25
ways we pay, 216-21
congressional sessions, 140-41
congressional staff, 221-25
Connecticut, public funding system,

264-65, 273, 364w
Constitution, U.S., 127-30, 290-93
amendments, 292-93, 295, 299-300,
367w

residency requirements, 276-77

constitutional baseline, 127-31, 345ra

deviations from, 131-34

distortion and, 142-66
constitutional convention, 290-304,
367-69n

Constitutional Convention (1787), 291-92,
296, 317

Consumer Product Safety Commission

(CPSC), 196
consumer-safety law, 21-26
Contract with America, 94
contributions. See campaign contributions
Cooper, Jim, 122-23, 215
copyright, 55-60, 147, 224
corn industry, 45-52
Corning, 177

corporate personhood, 238-40, 36l«
corporate welfare, 269
Corrado, Anthony, 139, 366m
corruption

conceptions of, 226-47

dependence. See dependence corruption

elements of, 8-9

Framers and, 127-31

ordinary meaning of, 226

Progressives and, 4-7, 209-10, 234

systematic, 233-38, 241

theories of (corruption studies), 7-8,
328ra

type 2, 228-30

venal, 233-35, 237-38, 241
Cowen, Tyler, 189
Crawford, Kenneth, 102, 176, 340«
crony capitalism, 246-47
Crowley, Aileen, 306
Crowley, John, 306
CSC v. Letter Carriers, 227
Cunningham, Randy "Duke," xi, xii, 106-7,

107, 226, 232, 235
currency distortions, 335;?

Dade County judicial elections, 262,

363-64n
Daily Show, The (TV show), 250
dairy industry, 46
Daley, Brendan, 34lw
Danforth, John, 113
Davis, Devra, 27, 329"
Deardorff, Alan, 144-50, 166
debit card swipe fees, 164-66
Debs, Eugene, 3
debt, 194-95, 241

RepublicLost_HCtextFl.indd 373

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374 Index

decent souls. See good souls

Declaration of Independence, 292, 295

Deepwater Horizon, 260

DeFazio, Pete, 141

Deficit Reduction Act of 1984, 137

de Figueiredo, John M., 117, 135-37

DeLay, Tom, 236-37, 278

deliberative polls, 302-3

Dell'Era, Michele, 111

Dellinger, Walter, 296

democracy, and the Framers, 127-28, 344re
democracy vouchers, 266-70, 365-66«
Democratic Congressional Campaign

Committee (DCCC), 162
Democratic Party (Democrats), 92-94.
See also Left, the
campaign contributions and, 96-98
financial deregulation and, 73-74, 82-84
political polarization and, 97-98
presidential election of 1912, 3-6
reform vs. status quo, 309-12
teachers' unions and, 66-67
dependence corruption, 15-20, 230-46,
328ra

Supreme Court and campaign funding
regulation, 238-45
deregulation, of financial system, 68-69,

72-79, 81-84
derivatives, 71-77, 81-83, 337-38w
Dickens, Charles, 22
Dimon, Jamie, 81, 84-85
disclosure, 225, 252-59
Disconnect (Davis), 27, 329«
distortion, 142-66, 232-33, 243

agenda vs. substantive, 151-52, 164

income and, 152-60

lobbying and, 142-51

political parties and, 160-63
distraction, 138-42, 348-49ra
distribution of wealth, 152-57, 350w
districts

democracy vouchers and, 266-67
political polarization and, 97-98, 339re
primary challenge candidacies, 276-79
residency requirements, 276-77

doctors and drug companies, 15-17

Dodd-Frank Wall Street Reform and
Consumer Protection Act, 147-48,
185-90, 336n, 355n

Dole, Bob, 157

Douglas, Paul, 110

drug companies, 15-17, 180-84

drug trials, 33
Durbin, Richard, 144
Dyer, Jim, 237

E. coli, 50, 333«

earmarks, 104-5, 112-16, 224, 281
Economic Analysis of Law (Posner),

69-70, 78-81
economy of influence, 17, 89, 104-6
distortion and, 142-66
distraction and, 138-42
legislative voting patterns and, 125-27,

134-38, 159, 170-71
trust and, 166-70
Edmond J. Safra Center for Ethics, xiii,
28-29, 87

Edmonds, George Washington, 102, 340n
education, world rankings, 61-62, 334-35n
educational reform, 61-66

teacher performance and, 62-66, 335w
Edwards, John, 174
efficient markets, 207-11

pollution and, 53-60
Eli Lilly, 216

elites. See rich people, political

influence of
Emanuel, Rahm, 162

Emergency Economic Stabilization Act of

2008, 137
emoluments, 19
Emoluments Clause, 18, 129
Environmental Protection Agency (EPA),

196, 251-52, 257
equality conception of corruption, 240-41
estrogens, 22-23
ethanol, 50-51, 333«
exchange economies, 107-10
executive compensation, 156
externalities, 53-57
Exxon, 29-30

Fair Elections Now Act, 273-74, 324
farm subsidies, 46-52
federal bailout, 80-81, 186-89, 210-11
Federal Election Campaign Act of 1971, 95,
252, 339rc

Federalist Papers, 128, 297-98, 344w, 345«
federal regulations. See regulations
Federal Reserve, 77, 79-80, 189
Federal Trade Commission (FTC), 178
financial crisis, 67-86, 172, 185-87
absence of regulators, 84-86

RepublicLost_HCtextFl.indd 374

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Index 375

rationality behind, 69-70, 185-186
role of campaign contributions, 81-86
role of deregulation, 68-69, 72-84,
185-86

role of derivatives, 71-77, 81-83
Financial Crisis Inquiry Commission, 76,

79, 80, 82-83, 337re
financial deregulation, 68-69, 72-79,

81-84, 185-86
financial "reform" bill. See Dodd-Frank

Wall Street Reform and Consumer

Protection Act
Fingerhut, Eric, 133, 149
Fiorina, Morris, 98
First Amendment, 130, 239-40, 365ra
Fish, Hamilton, IV, 134
Fishkin, James, 302
flat taxes, 200, 207
Foley, Edward B., 351«
food choices and free markets, 43-52
food subsidies, 46-52
Fool's Gold (Tett), 84-85
Ford, Gerald, 193
Ford, Harrison, 306
foreign aid, 301-2
Fowler, Wyche, 163
Fox, Justin, 107

Framers, 1, 18-19, 61, 127-31, 157-58,

241-42, 290-92
Frank, Barney, 111, 215
Franklin, Benjamin, 2-3, 18, 317
freedom-restricting rule, 34-36
free markets, 207-11

farm subsidies and, 43-52
free riders, 56-57, 59, 176
free speech, 228, 239-40, 245-46
Frieden, Jeffrey A., 335«
Friedman, Milton, 246-47
Frist, Bill, 99

fuel efficiency, 251-52, 257

"funders" vs. "People," 151-52, 157-58,

232-33, 264
Fund for the Republic, 324
fund-raising, 94-95, 347-48ra. See also

campaign contributions
futures contracts, 74-75

Galbraith, John Kenneth, 82
Gates, Bill, 138

George HI of United Kingdom, 247

gerrymandering, 97, 293, 339«

gift economies (gifts), 18-19, 107-16, 235

Gilens, Martin, 152, 155-57, 159-60, 350«

Gingrich, Newt, 94, 199, 236, 237, 302

Glass-Steagall Act of 1933, 69, 73

Glazier, Mitch, 224

Goldwater, Barry, 193, 246-47, 249

Gonzalez, Matt, 366»

good souls, 13-20, 37-39

dependence corruption and, 17-20
doctors and the drug companies, 15-17
Yeltsin and, 13-15, 17

Google, 33-34, 35, 177, 315
Ngram Viewer, 340w

Google PAC, 315

Gorbachev, Mikhail, 13-14

Gordon, Sanford, 137

Gore, Al, 57, 172, 190, 191, 196-97, 236

Gorton, Slade, 133, 134

government, trust in. See public trust

government debt, 194-95, 241

government policy, 41-88. See also
regulations
educational reform and teachers, 61-66
efficient markets and pollution, 53-60
financial system and regulations, 67-86
free markets and food subsidies, 43-52
voting patterns and campaign money,
125-27, 134-38, 159, 170-71

Gramm, Phil, 73

Gramm, Wendy, 72

Gramm-Leach-Bliley Act of 1999,
73, 336n

Grant, Ulysses S., 101

Grant and Franklin Project, 265-72

Grassley, Chuck, 47

Gravel, Mike, 91

Greenspan, Alan, 75, 77-80, 82

"Greenspan put," 79-80

Greenwald, Glenn, 185

Grim, Ryan, 164-66, 197

Guggenheim, Davis, 190

Gupta, Sanjay, 137

Hacker, Jacob, 83, 96, 98, 118, 152-57, 162,

189, 206-7
Hagel, Chuck, 100
Hall, Richard, 144-50, 166
Hamilton, Alexander, 362n
Hamilton, Lee, 141-42
Hansen, John Mark, 168
Hanushek, Eric, 62
Harper's (magazine), 24
Hart, Oliver, 186-87

RepublicLost_HCtextFl.indd 375

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376 Index

Harvard's Edmond J. Safra Center for

Ethics, xiii, 28-29, 87
Hasen, Richard, 365 -66m
Hassenfeld, Alan, 314
Hatch, Orrin, 295-96
Hayek, Friedrich, 207, 246, 247
health care reform, 138, 150-51, 172, 176,

178-80, 183-86
health insurance exchanges, 179-80
hedge funds, 80, 156, 235-36, 355rc
Heinz, John, 113
Helmsley, Leona, 206
Henry, Patrick, 290
Hetherington, Marc, 42, 170
Hiatt, Arnold, 309-11
high-fructose corn syrup (HFCS), 44-45,

48-51
Hill, Matthew D., 117
Hitler, Adolf, 6
Hofstadter, Richard, 327«
Hollings, Fritz, 138
House of Representatives, U.S. See

Congress, U.S.
House Select Committee on Lobbying

Activities, 150
Hoyer, Steny, 220
Hutchinson, Thomas, 108
Hyde, Lewis, 107-9, 341ra

"Iceberg Theory of Campaign Contributions"
(Chamon and Kaplan), 258-60

ideological polarization, 97-98, 339w

imbalance, trade, 335w

income inequality and democratic

responsiveness, 152-60, 195, 350«,
352rc

income taxes, 202

Inconvenient Truth, An (documentary), 190
incumbents

free markets and, 208

ideological extremism and, 97-98

primary challenge candidacies, 276-79
independent expenditures, 271-72, 315
independent judiciary, 29-32, 130-31,

228-30
industry-funded studies

of BPA, 24-26, 32

of cell phone radiation, 26-28, 32
Ineligibility Clause, 129
inequality conception of corruption,

240-41, 362n
Inhofe, James, 126

institutional corruption, 16-17, 328«
interest rates, 70
International Paper, 47
Internet, 55, 147, 196-97
Investment Company Act of 1940, 73-74
Iraq war, 269
iron ore supply, 177
irrational lending, 67, 335w
Issacharoff, Sam, 95-96, 349n, 360rc,
364-65w

Jackson, Andrew, 210, 229
Japanese judges, 228-29
Jay, John, 18

Jefferson, Thomas, 210, 362«

Jefferson, William J., 227, 232, 235

John Hancock Life Insurance, 47

Johnson, Andrew, 339»

Johnson, Lyndon Baines, 92-94, 193, 339«

Johnson, Simon, 80, 82, 83, 186, 188-89

Johnston, Michael, 328«

Joyce Foundation, 198

JPMorgan Chase, 81, 84-85

judges

election of, 229-30

impartiality of, 29-32, 228-30

tenure for, 63
junkets, 101-2

Kahn, Alfred, 81-82

Kaiser, Robert, 91, 95, 99, 103, 104, 110,

112, 116, 236-38
Kaplan, Ethan, 258-60
Karlan, Pam, 95-96, 349ra, 364-65«
Kelly, G. W , 117
Kennedy, Anthony, 241-45
Kennedy, Bobby, 14
Kennedy, John F., 339k
Kerry, John, 198-99, 233
Klein, Ezra, 184-85
Kohlberg, Jerry, 314
Kolb, Charles, 212
Kostmayer, Peter, 115-16
Krugman, Paul, 81, 187
K Street. See lobbying (lobbyists)
K Street Project, 236-37
Kwak, James, 80, 82, 83, 186, 188-89, 337«
Kysar, Rebecca, 203-5

La Follette, Robert, 4-5
Lai, Henry, 27-28
Lammie, Kelli, 270

RepublicLost_HCtextFl.indd 376

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Index 377

Langevin, James, 144
Lash, Kurt, 292
Leach, Jim, 84
leadership PACs, 218-20
Lee, Arthur, 18
Left, the, 172-92, 211-12

financial reform and, 185-90

health care reform and, 172, 176,
178-80, 183-86

presidential election of 2008, 172-75
Lehman Brothers, 80, 81
Levine, Mel, 133
Levinson, Sanford, 367-68n
Levitt, Arthur, 73, 189-90
liberals, use of term, 5
libertarians (libertarianism), 42, 72, 126,

210-11
Lib-Libertarians, 126
Lincoln, Abraham, 295, 339«
Liptak, Adam, 230
Livingston, Bob, 237
lobbying (lobbyists), 101-7, 274-75

Congress members' and staffers'
becoming, 123-24, 217-18, 221-25,
274

distortion and, 142-66, 352«
economy of influence and, 103-7
gift economy and, 107-16, 235
growth in power of, 116-18
history of, 101-3
K Street Project, 236-37
Obama and, 173-75, 182, 183-85
professionalization of, 102-4, 118
role of campaign cash, 101-7, 116-24,
178

tax law and, 202-6

use of term, 101
Lockhart, G. Brandon, 117
Lomasney, Martin, 111
Lonely Planet guidebooks, 34-36
Long, Russell B., 8
Lott, John, 95
Lott, Trent, 141
Louis XVI of France, 18, 247
Lowenstein, Daniel, 121, 189, 365n
Lowenstein, Roger, 74-75, 352n
Lynn, Barry, 176-77

McArthur, Travis, 186-87
McCain, John, 105, 190
McComas, Katherine A., 329«
McConnell, Mitch, 144

McCormick, Richard, 5, 327n, 36lra

Maclay, William, 362n

Madison, James, 127, 130, 292, 297-98,

344w, 367k
magnetic deviation, 19-20
Maine, public funding system, 264-65,

273, 364n
majoritarianism, 143-44
Makinson, Larry, 145
Mallaby, Sebastian, 189, 355«
Mann, Thomas, 139
Mansbridge, Jane, 350n
MapLight, 233, 260, 323
market concentration, 176-78
market protection, 208-11
markets. See efficient markets; free markets
Marx, Karl, 154
Mason, George, 129, 290
Mazzoli, Romano, 146
meals, lobbyist-paid, 219-20
Medicare Prescription Drug, Improvement,

and Modernization Act of 2003,

181-82, 184, 195, 354w
Mian, Atif, 137, 160
Microsoft, 31-32

Miles v. City of Augusta, 36l-62n
Miller, Harvey, 80
Miller, Marcus, 79-80
Miller, Merton, 76-77
MillerCoors, 177
Mining Enforcement and Safety
Administration (MESA), 196
Mitchell, George, 348n
monopolies, 176-77, 181-82, 354ra
moral hazard, 186-89
Morgan, Peter, 330«
Mornin.Joey, 121
Moss, David, 68-69, 70, 76
muckrakers, 36lw
Murtha, John, 223-24, 233

National Association of Home Builders

(NAHB), 116, 255
National Health Insurance Exchange, 179
National Institutes of Health, 24
National Progressive Republican League,

4-5

NBC Universal, 223
negative externalities, 54-57
Neustadtl, Alan, 119
New Deal, 46, 92, 176, 247

financial regulations, 69-73, 76

RepublicLost_HCtextFl.indd 377

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378 Index

New Hampshire primary, 285-86

new norms, and supply of campaign cash,

99-100
New Republic, 183-84
new suppliers, of campaign cash, 100-107
New York Times, 189, 230
Nike, 177

9/11 terrorist attacks (2001), 209
Nixon, Richard, 46, 92, 196
nonpolitician candidates, 276-79,
285-86

nonprofit institutions, and earmarks, 115
Norquist, Grover, 236

Obama, Barack

climate change and, 190-91

earmarks and, 104-5

health care reform and, 151, 172, 176,

178-80, 183-85
presidential campaign of 2008, 169,

172-75, 182-83, 191-92, 267, 280
Rock the Vote!, 168-69
tax reform and, 236

Washington culture and, 172-74, 182-83,

191-92, 243, 280-81
obesity-related diseases, 43-44
Occupational Safety and Health

Administration (OSHA), 196
O'Connor, Sandra Day, 229
Office of Congressional Ethics, 281
Office of Management and Budget (OMB),

196

Olson, Mancur, 205, 357«
OpenSecrets.org, 233, 323
O'Reilly, Bill, 250

Organisation for Economic Co-operation

and Development (OECD), 46
Origination Clause, 129
Ornstein, Norman, 139, 215
Ortiz, Daniel, 348-49ra
Oswald, Joel, 359«
"out-of-district" effect, 233
Overton, Spencer, 233, 267, 365w

Packwood, Bob, 151
PACs (political action committees), 120,
135, 137, 198-99, 218-20, 34l-42rc
Painter, Richard, 119
Panetta, Leon, 8, 104
participation, 168, 267
Partnoy, Frank, 76, 77, 84
patents, 180-81

Patient Protection and Affordable Care Act
(PPACA). See health care reform

Patterson, Thomas, 168

pay of Congress. See congressional pay

peaceful terrorist candidates, 276-79

Penny, Tim, 133

Peoples, Clayton, 34l-42«

"People" vs. "funders," 151-52, 157-58,
232-33, 264

Perry, Barbara, 298

Persily, Nathaniel, 270

Petraeus, David, 222

Pew Center on Global Climate Change,
56-57

pharmaceutical industry (PhRMA), 15-17,

180-84
Philip V of Spain, 18
Phillips, Kevin, 73

Pierson, Paul, 83, 96, 98, 118, 152-57, 162,

189, 206-7
Pinheads and Patriots (O'Reilly), 250
Pippen, Scottie, 47

Planned Parenthood Action Fund, 179

plastic and BPA, 21-26, 329»

Piatt, Thomas Collier, 132

PMA Group, Inc., 223-24

Pocock, John G. A., 241

policy struggles

educational reform and teachers, 61-66
efficient markets and pollution, 53-60
financial system and regulations, 67-86
free markets and food subsidies, 43-52

"political efficacy," 168

political parties. See also Democratic
Party; Republican Party
campaign funds and, 134, 160-62
democracy vouchers and, 266-68

political polarization, 97-98, 339m

pollution, 53-54, 57-58. See also carbon
pollution

Poole, Keith T, 152

Poshard, Glenn, 169

positive externalities, 54-56

Posner, Richard, 8, 69-70, 78-81, 122, 186,
194, 354ra

Powell, Michael, 222-23

prescription drugs, 15-17, 180-84

presidential elections
of 1912, 3-6

of 2008, 172-75, 179-80, 182-83
reform presidential candidates,
280-89

RepublicLost_HCtextFl.indd 378

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Index 379

small-dollar-funded elections, 264-72,
283-84

Pressler, Larry, 150-51, 170-71, 259

primaries

political polarization and, 97-98, 339"
presidential campaigns, 284-86
reform challenge candidacies, 276-79

Procter & Gamble, 177

Progressives (Progressive Era), 5-6, 234,
36lw

Public Citizen, 99

public funding, 264-65, 273, 364w
Grant and Franklin Project, 265-72

public good, 35, 110, 128

public option, and health care reform,
179-80, 184

public trust

loss of, in government, 9, 41-42, 166-70,

243, 353ra
in public companies, 33-36

quid pro quo, 105-7, 108, 110, 111, 114,
227, 231, 242, 245, 341»

Rajan, Raghuram, 47, 79-82, 86, 155, 178,
207-10

Rangel, Charlie, 220

Ravitch, Diane, 334n

Rawls, John, 154

Reagan, Ronald

crony capitalism and, 246-47

Johnson and civil rights and, 93-94

O'Connor appointment by, 229

Posner appointment by, 69

size of government and, 193-96, 197

tax credits and, 204

tax reform, 206-7

White House VIP tours and, 163

reciprocity, 108, 109, 111, 132, 146

Recording Industry Association of
America, 147, 224

recusal rules, 31-32

redistricting, 97-98

reforms (solutions), 249-307. See also
campaign finance reform
Article V convention, 290-304
choosing strategies, 305-7
conventional game, 273-75
incompleteness of transparency,
251-60

ineffectiveness of anonymity, 260-63
presidential candidates, 280-89

primary challenge candidacies, 276-79

small-dollar-funded elections, 264-72
regulations

campaign finance, 238-46, 36ln

climate change, 59, 190

consumer safety, 21-26

of financial system, 68-69, 70, 72-85,
185-87

of food, 45-46, 47

Nixon and, 196
regulatory capture, 151, 354w
Reich, Robert, 118, 191
Remix (Lessig), xii-xiii
Republican Party (Republicans). See also
Right, the

big government and Reagan, 187, 192-96
campaign contributions and, 96-98
citizen-owned elections, 278-79
financial system and, 73, 82, 84
Johnson and civil rights, 93-94
K Street Project, 236-37
political polarization and, 97-98
presidential election of 1912, 3-6
shrinking size of government, 196-99
tax simplification and, 199-207

research tax credits, 204-5

Restore Our Democracy, 220

Reynolds, Glenn, 330re

Richistan, 153-56

rich people, political influence of, 309-17
income inequality and democratic
responsiveness, 152-60, 195, 350n,
352n

Richter, Brian, 202, 347rc

Right, the, 193-213

big government and Reagan, 187, 192-96
keeping markets efficient, 207-11
shrinking size of government, 196-99
simplifying taxes, 199-207

Roberts, Janet, 230

Robin Hood fallacy, 162

Rockefeller, David, 47

Rock the Vote!, 168-69

Roe, Mark, 337-38;?

Roemer, Buddy, 282-84

Roemer, Tim, 141

Roosevelt, Franklin Delano, 246-47, 310
Roosevelt, Teddy, 3-6, 210, 234, 36l«
Rootstrikers.org, 2, 323-25
Rosenblum, Nancy, 161
Rosenkranz, Josh, 96
Rosenstone, Steven J., 168

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380 Index

Rosenthal, Howard, 152
Rostenkowski, Dan, 215
Rothenberg, Lawrence, 107
Rothstein, Joe, 91
Rubenstein, David, 8
Rubin, Robert, 75

runaway convention, 294, 298, 367-68n
Ryan, Vin, 314

Sabato, Larry, 367ra

safe seats, 97-98, 276, 339w

salaries of Congress. See congressional pay

Salazar, Ken, 47

sales taxes, 202

salmonella, 50, 333w

Sample, James, 95

sanction model of representation, 345n
Saving Capitalism from the Capitalists

(Rajan and Zingales), 208-10
Scarborough, Joe, 133
Schmidt, Eric, 315
school reform, 61-66

teacher performance and, 62-66, 335«
school vouchers, 61-62
Schram, Martin, 198, 199
Schumer, Charles, 83
SEC (Securities and Exchange

Commission), 73-74, 77, 189-90,

221-22
Rule 3a-7, 73-74, 336w
Second Amendment, 291
selection model of representation, 345re
semiconductors, 177
Senate, U.S. See also Congress, U.S.

elections, 292-93, 367k
Seventeenth Amendment, 292-93, 367k
shape-shifting, 121, 148-50, 162-63,

232-33, 350w
Silverman, Brian S., 117
Silverstein, Ken, 117, 123
Simon, Paul, 145-46
simpler taxes, 199-207
small-dollar-funded campaigns, 264-72,

283-84, 324-25
small farms, and corn subsidies, 49-50
Smith, Adam, 35, 208, 246
Smith, Bradley, 125-27, 166, 170, 364-65rc
Smith, Gordon, 47
Smith, Steven, 141
smoking and lung cancer, 26
Snowberg, Erik, 34ln
Snyder, James M., 135-37

So Damn Much Money (Kaiser), 91, 95, 99,
103, 104, 110, 112, 116, 236-38

soft contributions, 270-71

solutions. See reforms

Soviet coup d'etat attempt (1991), 13-14

Soviet Union Politburo, 214, 218

Speier, Jackie, 113-14

spousal income, of members of Congress,
216

steel industry, 47-48
Steffens, Lincoln, 161
Stennis, John, 99
Stevens, Ted, 215
Stevenson, Adlai, 110
Stewart, Jon, 250
Stigler, George, 350«
Stiglitz, Joseph, 156
Story, Louise, 337k
Stratmann, Thomas, 137
Strauss, David, 351k, 365k
substantive distortion, 151-52, 164
Summers, Larry, 75
Sunlight Foundation, 260
Supreme Court, U.S. See also specific cases
campaign funding regulation, 238-45,
361 n

understanding of "corruption," 226-27
Swenson, Charles, 137
swing voters, 97-98
systematic corruption, 233-38, 241

Taft, William Howard, 3-6, 30-31

tariffs, 48-49

tax collection, 200-201

taxes (tax policy), 199-207, 235-36, 265

tax extenders, 203-5

tax simplification, 199-207

tax software makers, 201

tax sunsets, 203-5

teacher performance, 62-66, 335«

teachers' unions, 66-67

teacher tenure, 63-64, 65

Teachout, Zephyr, 128, 130, 241, 246,
344-45M

Tea Party, 164, 211, 281-82, 325

technological innovation, and financial
system, 71-72, 122, 336k

tells, 41-88

educational reform and teachers, 61-66
efficient markets and pollution, 53-60
financial system and regulations, 67-86
free markets and food subsidies, 43-52

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Index

381

tenure, 63-64

for academics, 63-64

for judges, 63

for teachers, 63-64, 65
Tett, Gillian, 73, 75-76, 84-85
Thayer, George, 5

73 Bankers (Johnson and Kwak), 82, 83

Thompson, Dennis, 31, 107, 170, 328ra

Thoreau, Henry David, 2, 317

Title II of Communications Act, 197

Title VI of Communications Act, 197

Title VII of Communications Act, 236

Tolchin, Martin, 150, 342ra

Tolchin, Susan, 150, 342n

trade restrictions, 45-49

transparency, incompleteness of, 251-60

Tristv. Child, 101

trust. See public trust

TSMC (Taiwan Semiconductor

Manufacturing Company), 177
Turner, Ted, 47

Twenty-first Amendment, 367w

Twenty-second Amendment, 367»

Twenty-fifth Amendment, 367ra

type 1 corruption, 228

type 2 corruption, 228-30

type 2 diabetes, 43-44

Tytler, Alexander Fraser, 194, 206

UMC (United Microelectronics

Corporation), 177
unions, 144, 160-61

teacher, 66-67
University of Chicago Law School, 13,
172

Uslaner, Eric, 362«
Uygur, Cenk, xi

Van Ness, Robert A., 117

venal corruption, 233-35, 237-38, 241

Visa, 200

vom Saal, Frederick, 22-24
vote buying, 261-62
voter turnout, 168-69, 172, 353n
voting patterns and campaign cash,
125-27, 134-38, 159, 170-71

vouchers

democracy, 266-69, 365-66n
school, 61-62

Wadhwa, Vivek, 334«
Wales, Jimmy, 34
Walker, David, 222
Wallis, John Joseph, 233-34, 241
Wall Street. See also financial crisis
Democratic Party and, 96-97
federal bailout of, 80-81, 186-89, 210-11
Wall Street Journal, 74-75, 205
Wal-Mart, 177
Ware, Stephen, 230
Warren, Mark, 353w
Washington, Denzel, 306
Washington Post, 84, 91, 184-85, 236-37
wealth. See rich people, political

influence of
Weber, Paul, 298
Weber, Vin, 149
Webster, Daniel, 102
Weimer, John L., 230
Weller, Mark, 119
WellPoint, 216
Whirlpool, 177
White House VIP tours, 163
Wikipedia, 34, 35-36
Williams and Jensen, 202, 359ra
Wilson, James, 297
Wilson, Woodrow, 3-6
Winner-Take-All Politics (Hacker and

Pierson), 83, 96, 98, 118, 152-57, 162,

189, 206-7
Wood, Gordon, 140
Woods, Randall, 93

world education rankings, 61-62, 334-35w
Wyden, Ron, 216

YearlyKos, 174

Yeltsin, Boris, 13-15, 17, 316

Yu, Frank, 117

Yu, Xiaoyun, 117

Zingales, Luigi, 47, 155, 178, 186-88,
207-10

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RepublicLost_HCtextFl.indd 382 {g} 8/23/11 1:19:52 AM

About the Author

Having spent much of his career exposing the illusion of copyright
law's action, Lawrence Lessig currently works in institutional corrup-
tion, probing the decisions of institutions that gamble public trust
on failed wars and special interests. Lessig directs the Edmond J.
Safra Center for Ethics at Harvard University, professes at Harvard
Law School, and champions the necessity of democratic citizenship
through his leadership of the Fix Congress First movement. He also
serves on the boards of Creative Commons; MapLight; Brave New
Film Foundation; Change Congress; the American Academy, Berlin;
Freedom House; and iCommons.org; and on the advisory board of
the Sunlight Foundation.

Prior to rejoining the Harvard faculty, Lessig founded Stanford
Law School's Center for Internet and Society and was professor of
law at the University of Chicago. He clerked for Judge Richard Pos-
ner on the Seventh Circuit Court of Appeals and for Justice Antonin
Scalia on the United States Supreme Court. Among Lessig's achieve-
ments are the Free Software Foundation's Freedom Award and
being named one of Scientific American's Top Fifty Visionaries.
Lessig holds a BA in economics and a BS in management from the
University of Pennsylvania, an MA in philosophy from Cambridge
University, and a JD from Yale University.

383

RepublicLost_HCtextFl.indd 383 {g} 8/23/11 1:19:52 AM

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